India’s GramCover banks pre-Series A funding for rural insurance network

GramCover has raised an undisclosed amount of pre-Series A funding from Emphasis Ventures, Flourish, Omidyar Network India, and existing investor Omnivore.

The Noida-based startup is using an online-to-offline model to make insurance more accessible for farmers and other workers across rural India.

According to founder and director Jatin Singh – who is also founder and managing director at weather forecasting platform Skymet – insurance penetration is generally low in urban India and “practically non-existent” in rural parts of the country.

“You have 130 million farmers plus their families, so almost 700 million Indians, who are vulnerable to a multitude of risks: climate impacting their crop yield and health are the most obvious, but also risk of damage to assets including tractors, livestock, and property,” he told AFN.

“Traditional urban insurance brokers do not understand the needs of rural consumers, and hence GramCover has risen to the challenge of building an ‘insurtech’ platform to serve them.”

The startup links prospective customers to providers and offers a range of policies, from health and life insurance to crop, livestock, and vehicle protection.

Singh said that access to insurance helps smallholders manage their seasonal business cycle, “smoothing out potential downturns that would otherwise be financially catastrophic.”

As India lacks a comprehensive national healthcare system, medical insurance is critical for rural workers to avoid crippling hospitalization and treatment costs.

“Insurers have been trying to sell various policies in rural India for years, but lacked last-mile delivery and transparent pricing and coverage. GramCover is solving those challenges for rural India and ensuring that farmers have someone in their corner for claims support,” he added.

Central to this offering is GramCover’s “point-of-sale-person” (POSP) system that allows its agents to sell insurance policies and make payouts on the move, in remote areas, or in local stores.

These agents are “typically a village entrepreneur running a village shop, or farming […] who possesses the minimum qualifications, has undergone training, and passed the examination as specified in IRDAI [Insurance Regulatory and Development Authority of India] POSP guidelines,” Singh explains.

GramCover will use the new funding to expand its POSP network across rural India, to launch new products for farmers and small town consumers, and to build out its tech.

Over the next two years, the startup has set an ambitious goal of getting 5 million customers on its books. Singh said that it can achieve this through its partnership with the Indian government to distribute its subsidized national crop insurance policy, as well as via its collaborations with agribusiness corporates, farmer cooperatives, and NGOs to access their networks of smallholders and farm workers.

Nevertheless, GramCover still faces some obstacles in getting its message across. “Probably the biggest challenge we have faced is changing the mindset of rural consumers,” Singh said. “We have had to teach them that insurance, with its small upfront cost, is worth paying to avoid risks that could destroy your farm and family.”

GramCover is planning to start raising for its Series A round in October, and expects to be profitable by March 2021, having already hit “bottom-line breakeven.”

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