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Insurance penetration in India is poised to grow rapidly driven by the growing middle class and increasing digital penetration which will result in the insurance market reaching a size close to $222 billion by the fiscal year (FY) 2026, a report said on Friday.

According to homegrown consultancy firm Redseer, new online distribution models such as business to consumer (B2C), business to business (B2B) and business to business to consumer (B2B2C) are key drivers of growth, with B2C, in particular, gaining significant opportunities.

"It is interesting to note that B2C brokers have significantly higher contribution margins than B2B2C brokers, while B2B2C scales faster through uberization of agents, it also has relatively poor unit economics (largely owing to high agent payouts)," Mrigank Gutgutia, Partner at Redseer, said in a statement.

"On the other hand, B2C brokers utilise online marketing and asset-light models to derive better margins. The experiences that these new-age InsurTech models offer for customers are not merely digital, they are delightful. Additionally, these new and rising models are not just making insurance great for customers..." Gutgutia added.

The report sheds light on the B2C model, which seems to have a significant advantage.

Due to direct customer interaction, the claims risk in this model is much lower than in the other two models. The persistence rate too is higher due to better customer awareness.

But most importantly, customers enjoy great customer experiences thanks to end-to-end digital experiences through technological applications. In most cases, through the B2C model, the end-to-end customer journey is covered seamlessly.

Some of the B2C models' offerings include end-to-end digital experience through technological applications, app-based claims assistance, proactive conversions using call centres, visibility to multiple quotes, and more.