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This Untapped Sector Became This Startup's Business Model GramCover follows an assisted tech model to efficiently distribute insurance products in rural India

By Prabhjeet Bhatla

Opinions expressed by Entrepreneur contributors are their own.

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In the year 2000, foreign direct investment (FDI) was allowed in the insurance sector with a cap of 26 per cent stake in a joint venture with Indian partners. In 2015, then finance minister Arun Jaitley increased the FDI limit from 26 per cent to 49 per cent and the current finance minister Nirmala Sitharaman has further increased the FDI limit to 74 per cent, according to a report.

The insurance products penetration in the year 2001 was 2.71 per cent and currently, it is 3.71 per cent, which is way below the global average of 7.31 per cent. The prime reason stated to have been behind the decision to raise the FDI limit was to enhance insurance penetration in India which remains low even after increasing the FDI limit from 24 per cent to 49 per cent in the year 2015, the report said.

If we must grow the penetration of insurance, we must have simple products which create value since 70 per cent of the population still lives in rural areas. There has been an enhancement in incomes and acquisition of assets that need protection amidst the rural population, creating opportunities for exploration and expansion of insurance business in the otherwise untapped rural market. Insurance companies have a very strong presence in urban and metro areas but rural and semi-urban India require better coverage in products and distribution.

While the COVID-19 pandemic has wreaked havoc across sectors, it has proven to be a blessing in disguise for the life insurance sector in general and, particularly, health insurance. From being a push product, insurance has become a "nudge product" due to the uncertainties. People are more aware of insurance products, but affordability is an issue.
An increase in FDI limit brings opportunities for the insurance sector in terms of foreign capital infusion which is expected to be $3.5-4.5 billion as the Indian insurance business requires huge capital and deep pockets. The additional infusion of capital into the business could enable growth of the industry, but this can't be considered as the wonder drug to improve the insurance penetration and density in India. Especially for customers at the base of the economic pyramid, insurers like GramCover are implementing new business models and products to provide and administer the risk mitigation solutions at scale that meet their needs. This way, this insurance platform is helping close the protection gap as well.

GramCover chief executive officer Dhyanesh Bhatt told Entrepreneur India, "Gramcover's key motto is "de-risking rural India'. India is significantly underinsured both in terms of insurance penetration as a percentage of GDP and insurance density. This is even more real for rural India where 60 per cent of gross crop area is not insured, approximately 90 per cent of livestock is not insured, large part of health-related expenses are out of pocket and life insurance is also inadequate. At GramCover, we believe that technology coupled with a rural-facing partner network can go a long way in creating awareness and access to insurance. The challenges that are faced in rural insurance include lack of the right products, appropriate pricing, low purchasing power, and last-mile delivery. A phygital network which leverages technology and a rural network is ideally placed to solve these issues and democratize insurance access."

GramCover follows an assisted tech model to efficiently distribute insurance products in rural India. It onboards multiple insurance products of various insurance companies onto its partner application (GC Partner app) and GramCover's point-of-sale partners use this application to bring multiple insurance products to rural India right at the consumers doorstep.

Apart from this, the GramCover team also works with rural relevant organizations to create customized insurance products which are relevant for their network of customers or producers. By following a B2B2C/ B2B2F approach, they are said to be able to curate bespoke solutions on a group platform that are relevant for rural India.

Apart from distributing crop insurance under various central government and state government insurance programmes, GramCover is distributing products like parametric crop insurance, livestock insurance, motor insurance, health insurance, asset insurance, etc. in rural India.

Bhatt believes that the Indian Insurance Industry has been growing at a healthy CAGR of ~ 17-18 per cent over the last 5-10 years. However, most of the premium growth has come from the urban or the corporate customer. Rural India, which accounts for ~70 per cent of India's population still has little or no access to insurance. However, with the advent of technology, access to internet data and the proverbial JAM (JanDhan, Aadhar and Mobile) trinity, we are seeing improvement in rural India's ability to access insurance.

GramCover is supported by marquee institutional investors in the agritech, impact, fintech and deep tech domains like Omnivore, Omidyar Networks, Flourish Ventures, Emphasis Ventures, Siana Capital, Inflexor Ventures and Stride Ventures. In its latest Series A fundraise, the company raised over $7 million from new and existing investors. These funds will be used to improve the tech stack and scale up the business and support functions as GramCover aims to reach over 10 million customers in the next few years. Future fundraise plans would be contingent on the speed of their growth as well as fund requirement at various stages.

According to him, post the current fundraise, GramCover team wants to strengthen their technology and product offerings and also significantly scale up the business and support functions. They will work towards enhancing the availability of various insurance products and services on their platform and also expand their point-of-sale network across multiple geographies.

"The company aims to deepen its footprint in states where it is already present like Bihar, West Bengal, Assam, Uttarakhand, Andhra Pradesh, Maharashtra, etc., and shall further extend its presence across other states as well," he shared.

Prabhjeet Bhatla

Former Staff


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