In the recent past, digital payments instruments have reached to every nook and corner of the country, majorly due to the increased internet penetration and the massive investments of players like Paytm, Google Pay and PhonePe.
The money pumped in by these companies increased financial literacy among people living in rural areas. People are not afraid of transacting via UPI apps or buying anything from ecommerce platforms. But when it comes to other financial services like insurance, there’s still a lack of trust among people in rural areas on digital platforms.
According to a 2019 study published in the International Journal of Research in Advent Technology, rural India may offer a business opportunity worth $23 Bn for the insurance companies. The study estimates that only 8-9% of rural households are covered by insurance covers.
So, surely this section of the population is a huge market opportunity for insurance players. According to the founder of StoreKing Sridhar Gundaiah, the segment can be wooed with innovative saving schemes at affordable premiums. The retail store supply chain startup is foraying into insuretech sector with the aim of covering more individuals from rural India.
Tapping Into Retailer Network
Founded in 2012 by Gundaiah, Bengaluru-based StoreKing sells essentials to Kirana stores in rural areas besides converting them into digital service providing kiosks. Gundaiah said StoreKing has a network of around 20K retailers in nearly 8K towns and villages across southern and western India. The startup is backed by investors like Malaysia’s Axiata Digital. Till now, StoreKing has raised around $21.5 Mn.
StoreKing wants to leverage this huge network of retailers for selling insurance products. As these stores already offer services like bill payments, money transfer, and even EMI payments, Gundaiah believes it would easier for people to trust their nearby merchant for buying a product like insurance. “Insurance companies told us that you have the network in rural areas which can be used to sell insurances there,” Gundaiah said.
Currently, StoreKing has applied for a licence for a corporate agent from the Insurance Regulatory and Development Authority to sell all types of insurance including health, life, and general insurance. Gundaiah said that the startup is in talks with six insurance sellers on what kind of insurance products they can curate for rural India. “Insurance products customised for the rural are going to be the key differentiator,” he added.
Coronavirus Delays Launch
StoreKing had scheduled the launch of insurance products in early 2020. However, the Covid-19 outbreak had slowed down the process as the startup shifted its focus on meeting the demand for essentials in rural areas.
Gundaiah said that there is an unprecedented demand for groceries in rural areas, majorly due to the migration of daily wagers from the cities to the villages. “Also, most of the FMCG manufacturers are not able to maintain an adequate supply of products,” he added.
Due to these factors, StoreKing wasn’t able to focus more on the insurance launch as meeting the demand for groceries had become the top-most priority. However, most of the challenges are resolved now and StoreKing is now looking to launch insurance products in the rural market soon. Meanwhile, the startup is also working on steps for educating retailers with the knowledge of insurance products.
According to a report by TechSciResearch, the Indian digital insurance platform market is expected to reach $165.02 Bn by 2024 at a CAGR of over 13% during 2019-2024. In the segment, technologies such as artificial intelligence, Internet of Things (IoT), and data analytics are considered crucial factors for the growth of the industry. Startups like Digit, Coverfox, PolicyBazaar, Acko, among others are the major players in the insurance sector in India.