Horizontal e-commerce majors have been exploring many verticals ranging from grocery to content, financial services, travel and insurance amongst others. After leading a round in India’s first digital insurance company Acko, Amazon is entering insurance business.
Amazon has plans to sell life, health, and general insurance through its payment arm Amazon Pay reveals RoC filings with Ministry of Corporate Affairs (MCA). The move doesn’t come as surprise as Amazon’s rival Flipkart already had applied for IRDA license.
The Jeff Bezos-led company will likely to offer full stack experience that includes discovery, payment, delivery, and post-sales aspects. It would sell third-party insurance products along with its investee Acko Insurance.
Since insurance penetration in India is dismal, Amazon and Flipkart see sizeable opportunity in selling insurance and financial products. According to an Economic Survey 2018, the ratio of premium underwritten in FY17 to the gross domestic product (GDP) in India is mere 3.49 per cent.
Meanwhile, SoftBank-backed Paytm is already selling life insurance on its app through HDFC partnership. It recently started Paytm Money to sell a commission-free mutual fund. Ever since its launch, Paytm Money has been witnessing significant interest from people.
Over the past 12-15 months, VCs including strategic investor has been demonstrating decent confidence in fintech plays covering insurance. In June 2017, online insurance brokerage firm Coverfox had raised $15 million (Approx Rs 96 crore ) led by US insurer Transamerica.
Early this year, SoftBank had led a $236 million round in PolicyBazaar. The deal also made the Gurugram-based company to enter covetous Unicorn club and command valuation over $1 billion.
Mumbai-based Acko had raised $12 million in Series A round led by e-commerce giant Amazon, Ashish Dhawan, the founder of PE firm ChrysCapital and existing investor Catamaran Ventures in June this year.
Meanwhile, it’s not known whether Amazon has applied for IRDA approvals or not. It’s worth noting that it applied for a ‘Non-Banking Financial Company’ (NBFC) license from regulators last year. However, Amazon is yet to start the lending business on its own.
The development was first reported by Bloomberg Quint.