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Insurtech companies are eyeing MSMEs with byte-sized offerings, says experts

Credit and Finance for MSMEs: In India, the trust deficit between the customer and the insurance companies is higher than the rest of the world.

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MSMEs are one of the most underpenetrated markets in the insurance segment in India.

Credit and Finance for MSMEs: Insurance companies historically have concentrated their efforts on large organisations but of late with the acceleration of digitization, several insurtech companies are curating their offerings for the 6.3 crore MSMEs in the country with low-ticket size and over-the-counter products.

“MSMEs are one of the most underpenetrated markets in a large insurance segment in potentially the fastest growing economy in the world,” said Raghuveer Malik, Corporate Insurance Head at PolicyBazaar.

Malik was speaking at the panel “How embedded and bespoke InsurTech better serves SMEs and Enterprises” at Niti Aayog-supported FinTech Festival India at Pragati Maidan, Delhi. 

He added, that the simplicity of the user’s journey is key for the insurance product’s uptake as the customer needs to speak to the insurance company while applying for their claims which is always at the backdrop of an unfortunate event. “Just putting a product out there and leaving it for people to consume doesn’t work. Customers need to be made aware of the product contours through support and advisory.” PolicyBazaar receives 1,000-2,000 inquiries daily organically from SMEs. 

Another strategy that is gaining traction is embedded insurance which includes adding insurance protection while a consumer is buying a core product, let’s say, showing a notification to an SME owner of taking up a credit risk insurance while they are opting for a loan from a fintech firm. 

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“Insurance is not sold, it is purchased. Selling byte-sized products as embedded insurance works as we exactly know what is the context and making the insurance discoverable in the same interface becomes very easy for customers to select the right product,” said Gourav Agarwal, Director of Partnerships at Cover Genius. 

George Kesselman, Chief Commercial Officer, SEA, ZA Tech added that they are also seeing interest from large companies, HR platforms or even banks who have a long tail of MSME clients and vendors and want to offer specific insurance products to the small businesses on their platform. 

Brands may have the right product-market fit but they are bound to fail if the customer doesn’t trust the brand. While trust deficit is a global phenomenon, it is higher in India, said Abhishek Poddar, co-founder and CEO at Plum. “Insurance is a very unique product because customers pay the entire money in advance for a future promise. For a company to command that confidence from the customer, they have to provide the customer the experience that they will be taken care of for the next one year.”

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