India’s insurance market is at an inflexion point. Backed by IRDAI reforms, digital-first customer journeys, and insurtech solutions, the industry is moving from reactive protection to proactive, personalised insurance. With “Cashless Everywhere,” the Bima Trinity stack, and embedded distribution models coming of age, insurance technology is enabling products that are relevant, affordable, and scalable.
This blog explores seven emerging insurance products that Indians are expected to purchase in 2025 and beyond, and how insurtech companies in India can help businesses capitalise on them as new revenue streams.
1. Parametric Climate Covers: Weather-Proofing Lives and Businesses
Parametric insurance is a data-driven, trigger-based insurance product that pays out automatically when a preset condition, such as a specific level of rainfall, temperature, or wind speed, is met. Unlike traditional insurance, customers don’t need to file lengthy claims or prove losses to get compensated.
Market signal: In 2024, Kolkata became the first Indian city where residents purchased climate parametric covers protecting against extreme heat, rainfall, and cold spells. Similar pilots have been tested for farmers, event organisers, and gig workers in other climate-vulnerable states in India.
Use cases: Protection for urban households during heatwaves, delivery partners facing disruptions from heavy rainfall, and event organisers insuring against weather-driven cancellations
Why it’s emerging: Climate risks in India are escalating. 2023 was the country’s second-warmest year on record. Parametric insurance offers instant relief, making it highly relevant in a climate-vulnerable economy.
Insurtech role: Leveraging APIs from the Indian Meteorological Department (IMD), satellite feeds, and IoT devices, insurtech solutions can automate payouts, reduce disputes, and bring this innovative product to scale.
2. Surety Bonds: A Digital Alternative to Bank Guarantees
Surety bonds act as a guarantee for infrastructure projects, where the insurer assures the project owner that the contractor will fulfil obligations. If the contractor defaults, the insurer pays the project owner.
Market signal: By mid-2024, surety bonds worth ₹3,000 crore were issued, with NHAI accepting 164 surety bonds for road projects. India also witnessed its largest performance surety bond (over ₹100 crore), signalling strong adoption.
Use cases: Construction, EPC contractors, public-private partnerships, and SMEs in infrastructure projects
Why it’s emerging: Government infrastructure spending is at an all-time high, and contractors prefer surety bonds over traditional bank guarantees, as they free up working capital.
Insurtech role: Through insurance technology platforms, contractors can apply, get assessed via digital risk engines, and receive bonds in days rather than weeks. Automated underwriting and API integrations with project management systems reduce friction and open up new markets.
3. Usage-Based Motor Insurance (PAYD/PHYD)
Usage-based insurance (UBI) personalises premiums based on how much and how safely a person drives. Pay-As-You-Drive (PAYD) charges customers by kilometres driven, while Pay-How-You-Drive (PHYD) adjusts pricing based on driving behaviour.
Market signal: ICICI Lombard, HDFC ERGO, and other leading insurers now offer PAYD/PHYD add-ons. Hybrid work culture and rising fuel prices have made PAYD popular, with adoption growing by 25% in 2024.
Use cases: Urban car owners driving fewer kilometres, fleet operators optimising insurance costs, and OEMs offering “smart insurance” at the dealership
Why it’s emerging: Fairer pricing appeals to cost-conscious consumers. It also reduces fraud and incentivises safer driving.
Insurtech role: With smartphone-based telematics and IoT devices, insurtech companies can track mileage and driving scores, enabling insurers to offer dynamic pricing and create loyalty-driven reward systems.
4. Cyber Insurance for MSMEs and Consumers
Cyber insurance protects businesses and individuals against data breaches, ransomware, phishing, and other cyber-attacks. It covers financial loss, legal liabilities, and in some cases, reputation management.
Market signal: India reported 2.04 million cyber incidents in 2024. MSMEs, now digitised through GST, UPI, and e-commerce, are highly vulnerable but under-protected.
Use cases: MSMEs using SaaS tools, startups handling customer data, and affluent individuals with digital wealth portfolios
Why it’s emerging: With increased adoption of AI, cloud, and digital payments, cyber threats are escalating. Regulators are also mandating tighter compliance, pushing businesses to adopt coverage.
Insurtech role: By embedding cyber insurance into banking portals, accounting SaaS, and e-commerce platforms, insurtech solutions can bring coverage to the underserved MSME segment and provide 24×7 monitoring and claims support.
5. Embedded Insurance: Protection at the Checkout
Embedded insurance integrates protection directly into customer journeys, allowing buyers to purchase coverage during a transaction.
Market signal: Airlines, e-commerce platforms, and ride-hailing apps in India already embed travel, device, and accident covers. Globally, embedded insurance is projected to grow from $144 billion in 2025 to $803 billion by 2032.
Use cases: Flight cancellations, mobile device protection, accident covers during ride-hailing trips, or shipping insurance in e-commerce
Why it’s emerging: Customers want convenience, which is buying insurance without paperwork or extra steps. And for the digital platforms, embedded insurance is a revenue multiplier.
Insurtech role: With API-first insurtech platforms, businesses can offer plug-and-play insurance at checkout, automate claims, and monetise insurance sales through commissions, turning insurance into a profit centre.
6. OPD-First Health Plans and “Cashless Everywhere”
Traditional health insurance focused heavily on hospitalisation, leaving OPD (outpatient department) expenses uncovered. New OPD-first plans now cover consultations, diagnostics, and medicines, creating a more holistic offering.
Market signal: IRDAI’s “Cashless Everywhere” initiative allows policyholders to access cashless treatment at any hospital, including non-network ones. Combined with OPD-first covers, this shifts health insurance from reactive hospitalisation to proactive health management.
Use cases: Urban families with frequent outpatient expenses, corporates offering wellness to employees, and Tier-2 markets seeking affordable, holistic health solutions
Why it’s emerging: Rising outpatient costs and consumer demand for preventive care make OPD coverage a must-have.
Insurtech role: Insurtech platforms simplify OPD claims through e-wallets, AI-powered pre-approvals, and digital pharmacy tie-ups, making OPD-first health plans more attractive and practical.
7. Pet Insurance: Protecting India’s Growing Pet Families
Pet insurance covers veterinary expenses, surgeries, medication, and sometimes third-party liabilities caused by pets.
Market signal: With India’s pet population surpassing 32 million the pet care market is expected to become over Rs 6500 crore by 2025. This means that urban households are spending significantly on healthcare and lifestyle products for their pets and rising veterinary costs are making insurance highly relevant.
Use cases: Urban millennial and Gen Z pet owners, pet care startups, and vet clinic networks
Why it’s emerging: Pet parents view pets as family members, making financial protection for pet health a natural extension of household insurance.
Insurtech role: Through digital insurance solutions, insurtech companies can integrate pet covers into vet clinic software, e-commerce pet supply apps, and grooming platforms driving adoption with instant reimbursements and wellness add-ons.
The Role of Insurtech in Revenue Generation
Insurtech is the engine behind product innovation and revenue growth. From climate covers using weather APIs, to PAYD powered by telematics, to embedded micro-covers in checkout flows, insurance technology makes these emerging products practical, scalable, and profitable.
For businesses such as banks, NBFCs, retailers, OEMs, and digital platforms, insurtech solutions unlock new revenue streams through commission models, while boosting customer loyalty and retention. For insurers, data-driven pricing and automated claims lower costs and improve loss ratios. In short, insurtech doesn’t just digitise insurance, it transforms it into a frontline revenue driver for every business with a digital touchpoint.
Wrapping It Up
The Indian insurance sector is moving toward hyper-personalisation, embedded distribution, and instant claims. Backed by insurtech innovations, these seven products, climate parametric covers, surety bonds, usage-based motor insurance, cyber protection, embedded insurance, OPD-first health plans, and pet insurance, will shape demand in 2025 and beyond.
For insurers, brokers, and digital platforms, the playbook is clear: go embedded-first, design for instant payouts, and price dynamically using real-world data. With the right insurtech partner, these opportunities can be converted into scalable, revenue-generating growth engines.
FAQs
1. How is insurance technology changing customer experience in India?
Insurance technology (insurtech) is making policies easier to buy, manage, and claim. With innovations like digital KYC, instant policy issuance, API-based claims, digital customer onboarding and “Cashless Everywhere,” customers experience faster turnaround and more transparent service.
2. What role does insurtech play in digital insurance distribution?
Insurtech enables insurers and businesses to distribute policies seamlessly through digital platforms such as e-commerce apps, banking portals, travel OTAs, and fintech wallets. By embedding insurance at checkout, it opens new revenue streams for partners and expands reach in Tier-2/3 cities.
3. Why is usage-based insurance expected to grow in India?
Usage-based insurance (UBI), including Pay-As-You-Drive (PAYD) and Pay-How-You-Drive (PHYD), is expected to scale as hybrid working, connected cars, and telematics adoption grow. Customers benefit from fairer premiums, while insurers use driving behaviour data to reduce fraud and improve underwriting accuracy. Insurtech companies enable this through smartphone apps and IoT integrations.
4. How can businesses monetise embedded insurance solutions?
Businesses such as retailers, travel apps, banks, and OEMs can integrate embedded insurance into their customer journeys via insurtech APIs. Each policy sold generates commission-based revenue, while offering protection builds loyalty and increases customer lifetime value. This transforms insurance from a back-office function into a frontline revenue generator.
5. What are the biggest insurtech trends to watch in 2025?
Key insurtech trends for 2025 include: parametric climate insurance powered by real-time weather data, cyber insurance for MSMEs, OPD-first health plans, AI-driven claims automation, and embedded micro-covers at checkout. Together, these innovations are expected to increase insurance penetration, improve customer satisfaction, and drive revenue for insurers and digital platforms alike.
Bibliography (last accessed on August 25, 2025):
