Insurance penetration declined to 3.7 per cent in FY24 from 4 per cent a year earlier, largely due to a dip in life insurance.
Distribution segment mopped maximum investment of $80 million in the insurance space in 2025 as of June reflecting continued focus on expanding reach and improving customer acquisition. (Source: freepik)
Investment in India’s insurtech sector declined sharply by 52 per cent to $239 million in 2024, down from $497 million in 2023, signalling a marked shift from rapid expansion to more measured, quality-driven growth, said a report by advisory firm The Digital Fifth and B2B SaaS fintech firm Perfios. The funding had peaked in 2021 with $820 million in funding, buoyed by strong investor enthusiasm and aggressive expansion by startups.
Since then, capital flow has moderated steadily, down to $546 million in 2022 and further in 2023 and 2024. As of June 30, 2025, insurtechs have raised only $114 million, underscoring the trend of consolidation.
The top funded companies in the insurance sector, according to the report, are Acko with $597 million investment so far, Digit with $466 million funding, Navi ($445 million), PB Fintech ($443 million), Insurance Dekho ($397 million), and more.
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Distribution segment mopped maximum investment of $80 million in the insurance space in 2025 as of June reflecting continued focus on expanding reach and improving customer acquisition, followed by manufacturing with $8 million and insurance-as-a-service with $6 million.
However, the report estimates that the insurance sector will attract around $1 billion funding in the next 12 months, potentially surpassing the peak of 2021, with insurers expected to invest in advanced technology and systems for stronger product control and agility.
The report notes a significant gap in funding for core tech stack companies and claims solutions—areas critical to operational efficiency and customer experience. These segments are expected to drive the next wave of innovation and should attract greater investor interest going forward.
Despite the ongoing transformation, the sector faces structural challenges, the report noted. Insurance penetration declined to 3.7 per cent in FY24 from 4 per cent a year earlier, largely due to a dip in life insurance. Life cover penetration stood at just 2.7 per cent —far below the global average of 7 per cent, highlighting a substantial protection gap, particularly in life, health, and micro-insurance categories.
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“As distribution models mature and renewal income compounds, we expect patient capital —from family offices to long-horizon funds to play a vital role in building scalable, sustainable platforms. While profitability of early-stage insurance ventures may take time, the embedded value in customer relationships and renewals makes insurance a fundamentally attractive investment,” said Mahesh Parasuraman Co-Founder & Partner Amicus Capital Partners.
The total insurance premium in FY24 stood at Rs 11.20 lakh crore, with 74 per cent share of life insurance, 15 per cent of general insurance, and 10 per cent of health insurance. The total policies issued in FY24 were 36.52 crore, while total claims paid were Rs 7.66 lakh crore.
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