Startups leverage distribution chops to gain ground in general insurance
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As insurance penetration in India remains a challenge, more startups are looking to leverage their distribution capabilities to grab a chunk of the general insurance market.Multiple startups including bike-taxi platform Rapido, wealth-tech firm IndMoney and vehicle services firm Park+ have already secured or are in the process of applying for a corporate agency licence , which allows companies to tie up with 27 insurance companies across life, general and health to distribute their products.Rapido is currently seeking an approval from the Insurance Regulatory and Development Authority (IRDAI) for a composite corporate agent licence, aiming to offer insurance products to both drivers and customers, according to two people in the know.'Rapido is planning to take a corporate agency registration from IRDAI (Insurance Regulatory and Development Authority) to be able to distribute insurance products to its drivers…it has already set up a new subsidiary for this purpose,' one of the people cited above said.The Bengaluru-based company incorporated a new subsidiary last month and approved a resolution to undertake 'the insurance business as a corporate agent (composite) in respect of all classes of insurance, including motor insurance, general insurance, health insurance and life insurance,' according to a filing made with the Registrar of Companies (RoC). ET reported on March 12 that Rapido is expected to launch its food delivery service to compete with Zomato and Swiggy. Presently, the mobility firm fulfills almost 3-3.5 million ride hailing trips and parcel deliveries per day.Rapido's plans in insurance reflect a similar strategy that was adopted by ride-hailing major Ola , a few years ago. The Bengaluru-based company had launched a full-stack insurance offering for its driver partners and its customers. Ola was also selling trip insurance to customers taking rides on its cabs.In a similar move, vehicle-management platform Park+ is vying for a full-stack insurance distribution business. The company got the corporate agency licence in March and is looking to complete its integrations with around three to four insurance companies.'For us insurance is an ancillary business opportunity, something that is important for our customers. We are starting with vehicle insurance and the plan is to build an end-to-end process for our customers on the app from buying to service and claims support,' said Amit Lakhotia, founder, Park+.A senior industry insider told ET that for startups operating in the vehicle management or ride hailing space, car insurance is a big opportunity given the government mandate in this sector. However, he added, that buyers in this sector are extremely cost conscious which makes the viability of the business a challenge.'Since car insurance is a mandatory product many vehicle owner buys the cheapest product available, which means that innovating on new products becomes a challenge for tech startups,' he added. Industry estimates suggest more than 90% of the vehicle insurance business is still driven by offline agents and car sellers, that is the market these players intend to target. ET reported in November last year that fintech major Cred, which also has a corporate agent licence, is looking to monetise its vehicle management platform Cred Garage through insurance distribution. Cred Garage allows its users to manage their vehicles from tracking challans to getting services to renewal of insurance.IRDAI, which wants to get the entire country insured by 2047, is open to getting startups to distribute more of the insurance products so the market expands.Insurance companies have also opened up for more such tech partnerships given these platforms have captive customers who can be acquired relatively easily.Even mid-sized fintechs are lapping up this opportunity to turn into insurance distributors. While the likes of PhonePe, Amazon Pay and Paytm are large distributors already, players like credit distribution startup Freo and wealth management platform IndMoney have also gotten into this space. IndMoney has already partnered with 13 insurance companies to distribute all forms of insurance products to their customers.Responding to a detailed query by ET, Rapido said, "We would like to clarify that our current strategic focus remains on our core operations, and we have no plans to enter the insurance business.'
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