Payment firms like Paytm, PhonePe and BharatPe are pushing their merchants to opt for insurance protection when they take credit through these platforms and e-commerce platforms are bundling in insurance for their sellers to protect them against return to origin (RTO) and fraudulent orders, according to people in the know.
With advanced usage of data analytics and deep integration with ecommerce and payment platforms, new-age startups like Riskcovry and Assurekit are offering such products to fintech, small merchants, banks, direct to consumer brands and others.
“These are multiple contextual embedded or affinity insurance products which are being designed in a way that offers protection to distributors around their core business and what they are selling,” said Suvendu Prusty, founder-director, Riskcovry, a Mumbai-based insurtech startup.
Payment companies are bundling these products into their journey as well, especially for those merchants who are taking credit via these platforms. As per industry estimates typically 65 to 70% of the merchants opt for this product and the insurance premium is adjusted against the loan disbursal.
A top executive at a digital payments firm said that the merchant who is borrowing via a payment application is setting up daily repayments for collections. Now if the shop remains closed for a few days due to a health issue for the owner or natural causes then the insurance kicks in and repayments are managed thereby avoiding defaults.
Assurekit is one such startup which is also providing such deep integrated insurance solutions for merchants and small businesses, protecting them from fraudulent orders on ecommerce and also offering protection from repayment failures on credit they source via payment applications.
“This is a very strong data play that is emerging in this sector, the better my data the better my premium pricing, so startups here need to track very granular data to offer customised insurance products to these ecommerce platforms,” said Sunitha Viswanathan, partner, Kae Capital, an early-stage investment firm.
The fund is an early-stage investor in 2019-founded Assurekit. The startup has raised almost $6 million over two major institutional funding rounds, data from Tracxn shows.
Industry estimates suggest that each of these categories could be a $5 to $8 billion business opportunity as more and more merchants opt for the product and ecommerce and digital payments as industries grow as well.
A top executive at an insurance company who spoke on the condition of anonymity said that these products are generally loss making for the insurance firms. He added that there is always a push towards negative selection, where merchants who face more RTO cases or fraud attacks tend to take more of these products.
“Deep data analytics and modeling through new age startups is helping improve these products, which has resulted in better pricing nowadays,” the executive said. Many insurance companies are re-pricing these products, he added.
Additionally insurance companies are mandating basic checks like customer mobile number is genuine and the pincodes from where high degree of frauds are getting reported are blocked. For such services merchants and ecommerce platforms are working with insurtech startups like Assurekit.
Ecommerce enablement platform Shiprocket in its updated IPO documents filed with stock market regulator Sebi in December 2025 pointed out how the company is using AI and plans to invest further in offering deep insights to its merchants to protect them from frauds and RTO issues.
“Leveraging our data intelligence, we will address critical use cases such as identity verification for banking, financial services and insurance companies, shipping address enrichment and enhancement, RTO prediction, and end consumer behaviour analysis for new-age businesses and enterprises,” the company said in its DRHP document.
