A digital insurer is an insurance company built as a software company. You buy the policy in an app or on a website in a few minutes, a model sets the price, and you make a claim by photographing the damage. Digital insurers hire their own engineers and build most of their software themselves.
A traditional insurer sells mostly through agents and handles claims through its branch offices. The page on insurance distribution explains why. A digital insurer sells many of its policies directly to the customer, in its own app or on its website. On these direct sales, it pays no agent's commission. It also needs no large claims office. So its costs are lower.
Say you buy a second-hand scooter in Indore. You open a digital insurer's app and enter the registration number. The app fetches the scooter's model and year from the vehicle records. It asks a few questions and shows a price: ₹1,350 a year for comprehensive cover. You pay by UPI. Before the policy is issued, the insurer checks who you are through identity verification, as KYC rules require. The policy arrives in the app a minute later, issued by the insurer's insurance core system. Four months later, someone scrapes the scooter's side panel. You photograph it in the app. AI claims estimation estimates ₹3,200, an employee approves it, and the repair is booked the same day.
Digital insurers also sell in two other ways. They sell inside other companies' apps, for example with a flight booking or a phone purchase. This is called embedded insurance. They also list their policies on insurance comparison marketplaces. Some offer motor policies priced from driving data, through usage-based insurance. A digital life insurer can sell term life cover without a medical examination, through accelerated life underwriting.
In India, a digital insurer needs the same licence from IRDAI, the insurance regulator, as any other insurer. Its lower costs give it an advantage. The open question is whether that advantage is enough, because for every insurer the largest cost is the claims themselves.