This insurtech startup is simplifying insurance for SMEs

Penetration of insurance products in India remains very low as compared to developed economies. Especially, general insurance penetration is yet to see any meaningful adoption despite a growing Indian economy. SMEs (small and medium enterprises) and startups mostly stay out of the insurance umbrella. BimaKavach, an insurtech startup, is trying to increase the insurance penetration by making the products simpler with user-friendly purchase experience. In a conversation with the Bizz Buzz, company's founder Tejas Jain said that the startup is redesigning several business insurance products, keeping in mind the requirements of small businesses. It currently offers a variety of insurance product suggestions such as fidelity insurance, cyber risk insurance, directors and officers insurance, errors and omissions insurance, general liability insurance, and product liability insurance to clients. The insurtech firm has raised its seed-round of funding worth $2 million from a bunch of investors led by WaterBridge Ventures. Currently, the company is building up several teams in underwriting, technology and other areas for expanding its offerings. In a short span of time, the startup is working with more than 300 enterprises- both large and small across India. As the firm expands, it will look at next round of funding towards the end of next year

General insurance is an intensively competitive market with many insurance brokers operating in this space. What are BimaKavach's key differentiators as compared to its competitors? As an insurtech, how is the response of the market so far?

We are different from other insurance brokers because we are not just reselling a product from an insurance company. We are redesigning the product in such a way that that suits SMEs and startups. This is something, which we are doing in partnership with insurance companies. Then, we are making the entire process smooth. Currently, what is happening is if a company is buying a cyber-insurance product, it has to fill a form and provide 100-150 data points for getting a price quotation. For most companies, getting and compiling those data points is difficult. So, the company is not able to buy the insurance product. Compared to established companies, startups and SMEs don't have a team to manage these things. We intend to make the product simpler for them, which will lead to more coverage. If the same insurance product can be provided with answering of six to seven questions, that will be a lot simple for the companies to provide. Now, the question comes how can we provide an insurance product in such a manner? The answer is we redesign the product so that it is more attuned to the need of startups and SMEs. That will change the entire process in principle for making it simpler and make the purchase process easier.

On the underwriting front, what we are also coming up with innovations. For insurance companies, it is a challenge to sell their products to small companies. That is one of the reasons that most SMEs remain uninsured. Product design is also a dynamic process. That's why our primary focus is to constantly redesign the products. Secondly, we want to change the process for small businesses as compared to big firms. That is the difference we are trying to bring in for which we are getting the traction.

How many companies are currently covered through your platform? Please provide some view on the gross premium paid by your clients.

Currently, we are working with more than 300 companies. That comprises both small and large companies. In terms of premium, it is very difficult to give a number. But it is substantial.

General insurance policies come for renewal every year. What are the kinds of challenges you face when many small companies are required to do follow-ups for renewal? Is it challenging?

If you look at how traditional insurance firms' function is some executive will take the decision whether premium should be reduced or increased during policy renewal. At the end of the day, it is all about good or bad underwriting. Why general insurance policies need annual renewal is because business is dynamic. The same logic applies to us. India is a price sensitive market. If the underwriting model factors the changes automatically, it will be seamless. Our underwriting model does that. Of course, it will depend on national and global headwinds along with client-specific issues. We have seen instances where clients are willing to pay more for the service and technical assistance. So, there will be all kinds of cases.

You are saying BimaKavach's underwriting model is better that can take most risks into account and provide better pricing insights.

What we are saying is that we may not be able to underwrite the risk in case it is higher but my underwriting model should give insight to the insurance company whether the risk is good, bad or ugly. This is known as MGA (Managing General Agent) model, which is very popular in the western world. MGA is a specialised kind of broker who has the ability to design a product, price the product and work with the insurer or reinsurer to design the entire thing. MGA as a license doesn't exist in India but we want to create that additional underwriting layer that supplements the decision making for insurance firms. We just don't want to be a courier or postman who blindly sits in between insurance company and the client. We want to be the eyes on the street for the insurer. We are trying to bring that expertise.

Underwriting any risk of a company usually requires experts on the field who can go and assess the risk. Do you have that kind of workforce? Do you think technology alone can assess the risks accurately?

A lot of factors come into play. I am of that opinion that insurance can't be completely digital. It has to be a mix of physical and digital. In case of cyber-insurance space, the system can generate it. But if it is a large factory, it has to be both physical and digital. However, technology is leveraged to reduce human interventions. Moreover, clients also seek physical interface before signing the contract. So, both go hand in hand. We have feet in the street for assessing the risk. Risk is evolving and technology can be used to assess the risk better.

Are you looking for fund raising in the near future? What are your hiring plans?

We are building our leadership team and hiring senior people. We were bootstrapped for two-three years. We are 21 people team now. We have raised the seed round worth $2 million, which was led by WaterBridge Ventures. Blume Ventures, Arali Ventures and Eximius Ventures also participate in it. We are adequately funded now and will look at raising funds next year. That will be larger round and we hope to raise around $10 million or more as part of series-A funding. We are waiting for getting our broking license from IRDA (Insurance Regulatory and Development Authority) and hope to receive it around February next year. Currently, we work as technology consultant for insurance companies. As we get the broking license, we will look at raising our next round.