By Rohit Rathi, Co-founder & CEO, KarmaLife
The sync between civilisation and digitisation has become the pulse of our progress. While it has boosted our lives into a new-found strength and convenience, not all are pacing at the same speed. An example of this staggering divide is how trust networks in formal spaces like banks and insurance are practically non-existent to gig workers and low-income profiles.
Despite being the fastest growing segment of the workforce, gig workers in India have irregular cash flow, and any sudden expenditure has the power to disrupt their stability. A report by KarmaLife confirms that with 71 per cent constrained earners being primary breadwinners in the family, most of their income is spent on loans, repayments, and other basic household expenses. Additionally, the gig economy suffers from rampant irregularity in payouts, with regular payment delays, deferment of salaries, unforeseen cuts, etc. With banks struggling to serve this user base due to its inability to underwrite them or assess their risks, gig workers are rendered helpless. Therefore, not having easy access to financial products like insurance has large scale implications on their lives.
However, the stringent standards and fixed requirements at formal financial institutions got recognised as a massive pain point for gig workers. Consequently, several new fintechs have come-up with solutions to provide credit to gig workers and the blue-collar workforce. These companies cater to low-income users who do not have credit scores, bank statements, or employment contracts. It has led to the promising start of an upliftment journey in the gig workers and blue-collar community. Recently, the insurance domain has also turned their heads to this pain point.
As a flexible short-term model, the gig economy does not come with the benefits of traditional full-time employment like life & health insurance. It exposes gig workers to greater risks than traditional employees as often they are not even fully aware of their situation. Hence, the gig economy is still quite the untapped territory for the insurance sector. With a great opportunity to provide tailor-made policies, the industry is looking at an all-new line of insurances. These solutions may find more strength with the support of the government in encouraging more players in this space for initiating customised policies.
Borrowing from the Indian cultural philosophy of Karma, that determines the future based on present actions, we at KarmaLife are using data points to understand and underwrite gig workers based on their current behaviour and not their financial histories. KarmaLife offers Earned Wage Access (EWA) — a financial product that gives people access to a portion of their salaries any time before payday. Appealing and encouraging the fintech community towards development of the gig economy, KarmaLife is one of the pioneering players in this market in India.
The company also extends its services to users through partnerships with employers and aggregators of gig workers with its plug-and-play platform, which integrates with most HR management systems in minimal set-up time.