Indian rural insurance startup GramCover has raised $7 million in Series A funding. The round was co-led by Inflexor Ventures and Siana Capital. Stride Ventures was a first-time investor to participate in the funding, alongside existing backers Emphasis Ventures, Flourish Ventures, and Omidyar Network India.
Launched in 2018, the Noida-based startup is using an online-to-offline paradigm to make insurance more accessible for farmers and their communities across rural India.
Central to this offering is its “point-of-sale-person” — or “POSP” — model, under which agents can sell insurance policies and make payouts using a smartphone to connect to GramCover’s platform.
Co-founder and director Jatin Singh came up with the idea for GramCover while working with his other agtech startup, weather forecasting service Skymet. By providing weather-related data to smallholder farmers and crop insurers alike, he’d noticed that a gap in the market existed for accessible and affordable insurance aimed at smallholders and the rural communities they belong to – and which make up more than two-thirds of the country’s population.
“I realized the concept of insurance didn’t really exist in rural India,” he told AFN. It looked like a “great opportunity; if we [could] get a distribution network in place, we’d be looking at billion-plus-person market.”
Clearly, the rapidly expanding constellation of smartphones and wireless connectivity across India would be the route to get there. But Singh and co-founder Dhyanesh Bhatt — who is now GramCover’s group CEO — soon understood the solution wouldn’t be as simple as getting everyone to download an app.
“If you look at India in the last couple of years, lots [of people] have gained access to data and the internet,” Bhatt told AFN. “But in rural India, it’s mostly to connect socially via WhatsApp or Facebook, or to consume video or audio content. [The rural] consumers’ comfort and ability in terms of doing financial transactions online right now is still fairly low.”
GramCover decided it’d make more sense to have a network of partners on the ground, selling policies and making payouts in person – while giving rural consumers an actual human being to deal with, Bhatt said.
“We saw it’s good if you have someone locally who builds that comfort, that [the consumers] have someone they can go to – to create that access for insurance in the first place, and also helping the customer at the point of claim.”
GramCover’s rural agents are trained micro-entrepreneurs, according to Bhatt, and include housewives, students, and “village-level” businesspeople, among others.
“They have a smartphone, typically a two-wheeler to travel around, and a basic understanding of insurance,” he added.
GramCover claims that, in the past year, it has served close to 1.7 million rural customers, providing crop, livestock, motor, and health insurance worth ₹1.1 billion ($14.8 million) in premiums. It says it has insured 3.7 million farmers since it launched three years ago, and its objective is to insure 10 million farmers in the next three years, with a premium target of ₹10 billion ($135 million).
With that in mind, it’s using the Series A funds it has raised to shore up its tech platform and expand its on-the-ground presence. While it will make inroads into new markets within India, GramCover will focus on enhancing its presence in the 13 states — covering around 8,000 villages — where it already operates. “Given the vastness of the geography, it makes more sense to have deeper penetration in some of those [states],” said Bhatt.
Siana Capital partner Dinesh Goel said in a statement that the GramCover team understands “the key nuances of scaling up the non-urban segment of insurance distribution,” which he described as “a gigantic opportunity” in India.
“With a solid end-to-end deep technology platform in conjunction with a human-assisted local agency network, we feel GramCover is well positioned to continue its high growth trajectory. Further, the business model helps achieve the twin objectives of profitable growth and providing livelihood risk protection to a large rural population of India,” he added.