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India-based e-commerce company Flipkart has teamed up with legacy insurer Aegon Life Insurance, per Your Story. Under the partnership, Flipkart will sell Aegon’s policies via its own platform. The life insurance policy coverage options sold on Flipkart will vary from Rs 1 lakh ($1,349) to Rs 10 lakh ($13,491), with the premiums for the former starting at Rs 129 ($1.74). Policies will be available for existing Flipkart customers between the ages of 18 and 65.
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By diversifying its offering into life insurance, Flipkart could boost its e-commerce market share, and given the firm’s already large user base, uptake for the new service could be high.
Offering fintech services could be a boon for Flipkart as it competes for market share with Amazon in India. As of 2019, Amazon was India’s e-commerce leader, but Flipkart is on track to overtake the tech giant by 2023. Flipkart has dabbled in the fintech world — last year, for example, the e-commerce firm teamed up with alt lender ZestMoney to give its users access to point-of-sale finance options when buying products online on its platform — but this marks its first big push into the industry.
And offering fintech services in India will likely pay off: The country has the highest global fintech adoption rate (87%) among digitally active consumers, compared with the global average of just 64%, per EY. Hence, consumers in the country will likely be willing to try out the new digital service.
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Additionally, life insurance penetration in India is low, which is both an opportunity and a hurdle. Insurance penetration in India stood at just 3.7% during the fiscal year 2018-19, compared with the global average of 6%, per data from IRDAI.
The low adoption could be due to lack of awareness and availability of appropriate insurance services, which Flipkart’s digital offering could improve upon: The e-commerce giant already has around 160 million registered users on the platform, and it could convert them into policyholders. That said, Flipkart will likely also have to spend heavily on marketing efforts to make consumers aware of the benefits of life insurance.
Flipkart’s move adds to the number of other nonfinancial services firms dipping into fintech via partnerships. This announcement adds Flipkart to the various other companies making strides into the financial services industry by teaming up with fintechs or legacy players: Apple, for example, partnered with Goldman Sachs for its credit card venture last year, while ride-hailing giant Uber inked a deal with Holvi, a Finnish banking service provider for small- and medium-sized businesses (SMBs), to offer its drivers access to financial services. Going down the partnership route will likely help nonfinancial companies ensure they’re offering appropriate services.
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