Insurtech

What is insurtech?

Insurtech, short for insurance technology, refers both to the use of software, data and digital channels across the insurance value chain and to the companies built around them. In India the word covers several different kinds of business: online comparison and broking platforms, POSP networks run through apps, digital-first insurers, embedded insurance sold inside other apps (travel, lending, e-commerce, payments), and technology vendors that supply insurers with policy administration, claims and analytics systems.

Insurtech is not a separate licence. Each business must fit an existing IRDAI category, such as insurer, broker, corporate agent, web aggregator or IMF, or work as a technology or outsourcing provider to a regulated entity.

How insurtech fits Indian regulation

Regulatory sandbox. The IRDAI (Regulatory Sandbox) Regulations, 2025, in force from January 2025 and replacing the 2019 version, let insurers, intermediaries and other eligible entities test new products and processes with relaxations from many IRDAI rules for a limited period. Relaxations are not available from the Insurance Act or the IRDA Act, or on prudential matters such as capital, solvency and reserving.

Data and conduct. Digital distributors handle large volumes of personal data and must comply with the Digital Personal Data Protection Act, 2023 as its rules come into force, IRDAI's cyber security and information-sharing requirements, and rules against dark patterns in customer journeys.

Developments in 2025 and 2026

• Seller tagging from January 2027. Under the IRDAI (Insurance Intermediaries) (Amendment) Regulations, 2026, every policy sold through brokers, web aggregators, corporate agents and IMFs must carry the identity of the individual who sold it. A fully self-service digital sale must show the principal officer's contact details instead.
• The distribution consultation paper. IRDAI's September 2026 paper proposes product-level commission caps (lower for open architecture entities), all-inclusive commission that counts platform, display and branding payments, cost audits for large distributors, and market infrastructure institutions such as Bima Sugam with fees well below current commission. Moneylife reported a 36% fall in the share price of PB Fintech, which runs Policybazaar, on 24 September 2026. Khaitan and Co's analysis named POSP-led retail broking and OEM-linked motor distribution among the models facing the steepest adjustment.
• GST change. Individual life and health policies became exempt from GST from 22 September 2025. Insurers lost input tax credit on commission and many life insurers cut distributor payouts from 1 October 2025, as reported in the press.

What insurtech means for distribution

• Technology lowers the cost of a sale, not the need for trust. Apps make quoting and issuance fast, but customers still need help with what is excluded and how claims work. The most durable insurtech models combine digital journeys with human advice at the right moments.
• Partners want speed and simple APIs. For FinTechs and lenders embedding insurance, integration time, instant issuance and clean data exchange often matter more to the partner than the commission rate. Insurers that publish standard APIs and test environments are easier to partner with.
• Unit economics must survive lower payouts. Several insurtech distributors grew on high first-year motor and health payouts. If the proposed caps are adopted, renewal retention, servicing income and cost discipline become the levers.
• Compliance is part of the product. Consent capture, suitability screens, recorded disclosures and seller tagging need to be built into the journey. Retrofitting them later is costly.
• Embedded insurance carries bundling risk. Insurance shown during a loan or purchase must be optional and clearly separated. The RBI's Responsible Business Conduct amendments, effective 1 January 2027 for banks, NBFCs and housing finance companies, require explicit consent for each product and "No" as the default choice on digital screens.