Hopping from managing millions of dollars to selling insurance policies for household helps isn?t exactly a career leap a corporate high-flier would have chalked out. But for 40-year-old Rahul Pagare, a qualified chartered accountant with years of experience at Goldman Sachs under his belt, it definitely was a leap of faith. ?The last transaction I worked on was a R300-crore term loan for a company from Syndicate Bank. And next, I was selling a R300 insurance policy to a taxi driver at Terminal 3 of IGI airport?all within a space of 45 days,? he grins.
Pagare is the founder and CEO of financial inclusion start-up Swabhimaanya, which started operations in the last quarter of FY12 with insurance policies for workers in lower income groups and their families, such as household workers, taxi drivers, etc. With insurance premiums as low as R200-250 for accidental as well as life annual insurance cover, Pagare feels he has created products that have opened a huge market of ?explosive potential?.
He says, ?If you were an entrepreneur or a business, and someone came up to you and told you about an opportunity to get into a 90 million people-strong market, wouldn?t you jump at it? It?s the same in this case. It?s just a question of designing a product and reaching out to this stratum of society at the bottom of the pyramid. So is there an economic opportunity? I?d say yes, if you can design and deliver the product that this segment needs.? He adds that it?s astonishing that there are 90 million-plus people working as domestic help across the country and no one had yet attempted to create a distribution platform to provide them with financial services.
And he certainly seems to have the numbers to back his claims. In just about four months of commercial operations, Swabhimaanya has provided more than 70,000 people with insurance covers, earned more than R1 crore in revenues, and is growing at an average rate of 80% month-on-month in revenue.
But this is just the beginning. Pagare is now aiming to serve one million people in FY13, which would roughly lead to a revenue generation of around $6 million. Swabhimaanya was set up with an initial investment of R75 lakh by Pagare and three others, and Pagare has more than 75% stake in the venture. Today, according to Pagare, the company is worth around $5 million.
But expansion is surely a priority for him. ?We are looking at raising $1-2 million in the next two-three months for upgrading technology and branding. Right now we do very sketchy stuff, and we need to do a lot of branding to ensure that every domestic employee and every domestic employer is aware of this concept,? he says, as one looks around his plain and frugal office, functioning out of a basement in Gurgaon. In all, Swabhimaanya has 22 employees and three rented offices, one each in Gurgaon, Chennai and Bangalore.
Swabhimaanya works both on the online as well as offline platforms. The firm has tie-ups with microfinance institutions and NGOs who provide access to the target segment. Offline makes sense and most of the customers served have been accessed through it.
But what sense does it make to have these services available online (www.swabhimaan.com) as it?s highly unlikely that there will be Internet users in the segment that Pagare seeks to serve? ?What I?m trying to do here is called social tagging. I will tag every unserved community person to a more affluent community person. So your domestic help will be tagged to you, a microfinance borrower will be tagged to the microfinance institution, foundation member to the foundation and an NGO member to the NGO.
Reaching out to these caretakers through the Internet and pitching with them becomes a lot easier and the trust deficit that the beneficiary might be having towards the firm gets bridged easily,? he says, adding that there is an 80% conversion rate through social tagging.
The firm has Bajaj Allianz and Future Generali as its insurance vendors, but apart from these, there are also collaborations with the likes of Aircel and Tata Salt. While the latter two have no direct connection with insurance or financial services for the consumers, their products are included in package deals which adds value to insurance policies.
For Pagare, this is the beginning of realisation of a dream. ?I want to prove those wrong who say that serving the poor can?t generate money. We have not tried to cultivate self-respect in this segment and just tried to give away freebies,? he says, adding that he has a socialist agenda, but not necessarily a socialist way of realising it.
?Swabhimaanya is a combination of two words which translate to self-respect and universal acceptability. And that?s exactly what we?ve set out to achieve,? he says. But doesn?t he fear the venture failing, considering a segment where waters haven?t been tested yet? ?We have created so much value already and I see no reason why we would fail. But in case we do, we?d still have created a lot of value and a sustainable business model which would be of interest to a lot of people. Entrepreneurship is not about succeeding always. At times, the worth of failure is much higher.?
How it works
* Swabhimaanya works both on online as well as offline platforms. The firm has tie-ups with microfinance institutions and NGOs who provide access to the target segment
* Social tagging used for web sales. Every unserved community person is tagged to a more affluent community person. Reaching out to these care-takers through the Internet and pitching with them much easier
* In about four months of commercial operations, Swabhimaanya has provided more than 70,000 people with insurance covers