"The next wave of India’s Insurtech growth will come from scaling proven models," says Vivek Mandhata of BCG

India’s Insurtech ecosystem is sizable, with total valuations exceeding US$15.8 billion and revenues reaching US$0.9 billion in 2024—a tenfold increase since 2019. The sector includes two unicorns, eight companies valued between $100 million and US$1 billion, and over 45 players valued over US$1 million, according to the India InsurTech Association and BCG Report.

The report states that global Insurtech funding decreased to US$4.1 billion in 2024. Regional shifts are evident, with EMEA increasing its share while APAC's share declined. In India, this trend was similar: health Insurtechs led the largest deals, making up over 70% of funding and securing four of the five biggest investments, highlighting their importance in enhancing access, efficiency, and innovation.

The report also notes that the insurance sector ranks second worldwide in AI/GenAI adoption, behind only the technology industry. Use cases are rapidly developing throughout the value chain, including sales, underwriting, claims, renewals, and servicing. These applications have yielded notable outcomes: a 15–20% boost in agent productivity, 10–20% improvements in underwriting efficiency, a 20–30% reduction in service costs, and a 3-7% increase in claims payout efficiency.

According to the report, AI and GenAI can serve as key drivers to transform the insurance operating model from start to finish. In India, AI/GenAI offers a profit opportunity of US$4 billion, representing a 60% increase on a US$6 billion profit baseline, fuelled by US$25 billion in additional revenue and US$3 billion in cost savings. More than 90% of insurers worldwide have initiated AI/GenAI pilots; however, only 7% have expanded to enterprise-wide adoption.

“The next wave of growth will come from scaling proven models, improving unit economics, and deepening partnerships,” says Vivek Mandhata, Managing Director and Partner at BCG. In an exclusive conversation with Fortune India, he explains further how India’s Insurtech ecosystem remains resilient, fuelled by innovation, AI adoption, and a shift towards sustainable profitability.

Excerpts:

Q. India’s Insurtech ecosystem has grown nearly 10x since 2019, even amid a global funding slowdown. What are the key factors driving this resilience, and how do you see the ecosystem evolving as investors shift focus from growth to profitability?

VM: India’s Insurtech sector has grown nearly 10× since 2019, driven by rapid innovation across the insurance value chain—from digital distribution and embedded products to automation in underwriting, claims, and servicing. This pace of experimentation and technology adoption has underpinned the sector’s resilience, even amid a global funding slowdown. As the ecosystem matures, the focus is now shifting from experimentation to scalability - building sustainable, profitable models with clear paths to scale. The next wave of growth will come from scaling proven models, improving unit economics, and deepening partnerships between insurers and Insurtechs to build sustainable, high-impact businesses.

Q. The report highlights a US$4 billion profit opportunity from AI and GenAI in India’s insurance industry. Where do you see the biggest near-term opportunities across the value chain, and how can insurers move from pilots to scaled, enterprise-wide adoption?

VM: The $4 billion profit opportunity will be driven by three key levers — productivity, revenue, and cost. Insurers can achieve 30–40% productivity gains for employees across functions, 20% growth in revenue from hyper-personalisation, autonomous engagement and AI-based insights, and 10–20% reduction in operating costs in underwriting, claims, and servicing. Realising this opportunity will require insurers to move decisively from pilots to scaled adoption and to be focused on high-potential areas: selecting high-value pools, end-to-end reimagination of processes, policies & people, strong data foundations, and balancing traditional & generative models to manage costs and maximise value.

Q. The report positions insurance as a critical pillar in India’s Viksit Bharat journey, requiring 13–15% annual premium growth. How can AI-driven innovation and Insurtech collaboration unlock this growth while maintaining inclusivity and affordability?

VM: AI and GenAI can help unlock India’s next phase of insurance growth by transforming how insurers sell, underwrite, and serve customers, enabling leaner, more productive, and scalable operating models. These technologies can improve efficiency and accuracy while also strengthening unit economics, allowing insurers to reach new segments and geographies, including underserved and rural markets. A key part of this growth will come from collaboration: Insurtechs productizing and integrating AI-driven solutions across the value chain, and regulators fostering responsible innovation through sandboxes and governance frameworks. India’s strong digital and AI foundation, supported by 34,000+ GPUs, 1,000+ curated datasets through AI Kosh, and Indic-first multilingual models, will further enhance marketing, outreach, and fulfilment.

Q. Only 7% of insurers globally have scaled AI beyond pilots. What are the most common roadblocks to scaling, and what lessons can Indian insurers and Insurtechs draw from successful global models to drive end-to-end transformation?

VM: Based on what we have seen across markets, insurers that have scaled successfully have done four things well: 1. Identify 2-3 priority areas and reimagine them end-to-end rather than focus on point solutions 2. Invest in data – the past data cannot predict the future, and hence building data for the future, which can then be used intelligently, is critical 3. At the heart of any transformation are humans, driving organisational change management starting from the top 4. Also crucial to have clear, measurable metrics and leadership sponsors involved in this scale-up.