Reliance Jio & Insurance –

Tryst with Destiny

Table of Contents
Introduction.............................................................................................................................................1
The “Jio stack” .........................................................................................................................................2
Jio & Insurance ........................................................................................................................................3
Telco-led insurance distribution .........................................................................................................3
JioMart (or O2O commerce) ...............................................................................................................5
WhatsApp as the lynchpin ..................................................................................................................7
“Kirana store as an InsurTech company” .......................................................................................7
The WeChat Mini-Program model..................................................................................................8
JioMoney (or WhatsApp Pay?) ...........................................................................................................8
Will Jio become an insurance company? ...............................................................................................9
Conclusions............................................................................................................................................10
About the author...................................................................................................................................11
Disclaimer ..............................................................................................................................................11

Introduction
In the past 4 weeks, Reliance Jio has announced 4 capital infusions at a valuation of $64bn. Prior to
these fundraises, Jio had accumulated $6.3bn in debt [1] – most of which was attributed to
infrastructure expenditure to support Jio’s network (which was adding 600,000 customers per day!)

Jio’s fundraising activity has added $8.81bn to its coffers [2] after General Atlantic’s $857M infusion
last week. The consensus is that Jio has wiped its debt clean; which is true. But, like a “re-financing”
activity; I think Jio will shortly begin its foray into financial services (and, by extension into
insurance).

In this write-up, I will present you with 4 operating models that Jio could use when it decides to
foray into insurance. If you’re a regular reader or just wish to learn about Jio x Insurance, feel free to
skip the 1st section on the Jio stack.

If you’re vaguely familiar with Jio, put quite simply Jio’s “ecosystem” goes deeper than any other in
the world. Several infographics highlight the “India” stack but conveniently forget that the entire
stack is built on network and hardware layer infrastructure – precisely what the Jio network and
Jio Phone provide.
The “Jio stack”
The concept of the “India stack” might be familiar to several readers; Identity (Aadhaar), Payments
(Unified Payments Interface) and recently, the Account Aggregator Framework (i.e. “Open Banking”
for folks in the UK).

The graphic below will help you visualize the “Jio Stack”: (note-mobile network includes mobile data)

Some points to decode here:

1. Jio’s “ecosystem” play is much deeper than *any* other “super-app” aspirant (including
WhatsApp)
a. Ask yourself this question – “What does the average joe need to access WhatsApp?”
– no surprise, mobile network and a mobile!
b. Therefore, unlike any other “super-app”, Jio controls the access point to any digital
ecosystem for its 369M customers [3] (~ 30% of the Indian population)
c. Some may argue network switching costs are low, but in a base case, Jio controls the
digital access point for 70M users (the number of Jio phones sold until 10.2019 [4])
d. So, while WhatsApp was touted as the WeChat of India, Paytm launched its “Mini-
Programs” ecosystem in 05.2020, Jio isn’t competing at the “application layer” –
this will make more sense after examining the next point.

2. Jio has an Account Aggregator license

a. Jio was approved in 01.2020 by the RBI [5] to act as an Account Aggregator
b. An Account Aggregator is a 3rd party that handles data transfer and aggregation
across different apps – you can read more about it here [6]

Pause here for a second – for 70M odd customers, Jio not only is their gatekeeper
to the digital world but also is likely to become their “financial advisor”
 3. Jio is double squeezing the India stack
a. For those of you familiar with the “narrow waist of the Internet” concept [7] – the
India stack resembles that exact narrow waist – allowing for multiple networks at
the bottom and multiple applications at the top.
b. A typical super app would impose downward pressure on the “narrow waist” but Jio
imposes both a downward pressure (via the KaiOS app ecosystem / JioGenNext
accelerator push [8]) and an upward pressure (via the hardware and network layer)
c. I think over time, this pressure will collapse into a “Jio stack”

Aviral & the Junior VC team succinctly described this as “vertical integration” [9]; I’ve perhaps been
too verbose. Thus, it shouldn’t surprise you that Jio has been assigned a $64bn valuation.

Jio & Insurance

Let’s be honest – most of you came here for this section so I’ll try not to disappoint!

By virtue of being a network operator, Account Aggregator and (arguably) an app ecosystem, Jio has
several monetization opportunities via insurance. In this chapter I will highlight 4 potential
operating models.

Telco-led insurance distribution

The “freemium” model used by Joint-Ventures between Telco’s & insurance companies is well
documented. Let’s begin by examining some facts about this model and the Indian context:

a. Airtel serves as a current example of this freemium model [10]

• Free ₹2,00,000 term life insurance cover (underwritten by Bharti AXA Life) for all its
customers availing of the ₹179 pre-paid bundle.
• Free ₹4,00,000 term life insurance cover for customers of its ₹ 599 pre-paid bundle.
• That’s a lot of free stuff; Airtel Payments Bank [11] offers a range of paid-for
insurance products to its customers (completing the “freemium” aspect)

At first, you may think that as a network operator, Jio would require a payments bank license for the
“freemium” insurance model to work (which it has via Jio Payments Bank since 2018). Even if Jio
were just a Telcom network (which we know it isn’t), there are case studies to guide us as to how the
“freemium” model would work:

b. International case studies for the “Telco x Insurance company operating model”
• Bima [11]
i. Founded in 2010, Bima is a mobile-led insurance distribution specialist; with
35M customers.
ii. Bima is backed by Allianz Group (via their investment vehicle Allianz X) and
supported by Hannover Re (for reinsurance purposes) [12]
iii. Bima has also moved beyond (health) insurance to tele-medicine via its m-
Health service (roughly 2.2M customers)
iv. By focusing on product design and distribution; Bima helps both their
underwriting partners (insurance co’s) and Telco companies.
• MicroEnsure
i. Founded in 2002, it is arguably the original micro insurance specialist with
56M customers.
ii. With backing from AXA Group and the International Finance Corp [13],
MicroEnsure works actively with wallet providers & Telco’s in Africa and SE
Asia; feel free to read their extensive case studies in Africa!
iii. Back in 2015, Telenor India (now, Bharti Airtel) partnered with Shriram
Insurance and MicroEnsure to offer up to ₹50,000 in free life insurance
cover [14]

Jio’s role in the above “freemium insurance operating model” comes into question – is it only the
network provider? Or, would it also play a “design” role w.r.t the insurance products being sold?

There isn’t an easy answer here, but India is a unique market:

• Design support: InsurTechs such as Toffee Insurance, InsureFirst etc specialize in designing
“sachet” insurance products that could be bundled into pre-paid Jio data plans.
• Platform support: There even remains a question as to whether any design support is
required! Infrastructure providers such as eBaoTech and Riskcovry allow any insurance
company to offer plug-&-play products; alternatively – Acko Insurance could do product
design and underwriting.

However, it would be incorrect for me to not highlight past issues with telco-led insurance
distribution.

c. Battle scars
• You won’t find detailed articles in the public domain about this insurance model in
India; having spoken to micro-insurance veterans, there were issues in the past with
regulation.
• Further, there isn’t any public information about the success of these “embedded
insurance” schemes (do customers know what they’re buying? Do they understand
the claims process?)
• Also, absence of Bima’s operations in India tells you something.

However, some of these challenges might be side-stepped when the IRDAI’s Micro-Insurance
commission publishes its draft changes to regulations; you can read about it here [15]
 To summarize, Jio could adopt the standard “freemium insurance” operating
model used by Telco’s in emerging markets; the presence of “design” and
“infrastructure” partners in India would make this a rather simple roll-out process
(especially since it has locked-in distribution with 300M+ network subscribers).

But, why stop there? (Certainly, that is the Reliance motto!)

JioMart (or O2O commerce)

Yes, you read that right – JioMart could be the perfect platform for insurance distribution. Before
you jump to the comments section to call me an idiot; let’s review some insurance related activity
by e-commerce firms in India:

a. Amazon
• Amazon’s foray into insurance in India was clear with their strategic investment into
Acko Insurance ($13M Series B); Acko provides the insurance you can opt-in for
when you purchase you iPhone on Amazon! [16]
• Unknown to many, AmazonPay has composite corporate agency license in India to
distribute insurance products.

An insurance aggregator simply requires locked-in distribution. Unlike web aggregators, Amazon is a
unique position where customers naturally flock to their platform for e-commerce (no SEM spend!);
you could argue JioMart might see something similar..

b. Flipkart
• Flipkart recently made its foray into insurance by partnering with Aegon Life in
03.2020 to sell life insurance [17]
Here are some thoughts on JioMart as a platform for insurance:

1. The “Flipkart” insurance model (pure genius)

a. Whilst Flipkart distributing life insurance sounds ridiculous, it is secretly genius –
“the business model behind the business model”
b. eBaoTech’s InsureMo platform powers the integration between Aegon Life and
Fipkart [18]
c. What you as a customer see is a by-product of Aegon Life and Flipkart’s true
partnership – offering Group Life insurance to Flipkart’s network of wholesale
retailers (and their staff members)
d. Furthermore, recent IRDAI regulations which mandate employer provided
insurance coverage against Covid-19 could provide the right tailwinds for Flipkart
to become the “commercial insurance broker” for its merchant network. [19]

If you pause for a few seconds – Flipkart’s foray into insurance reminds me of Ola Insurance and Grab
Insure which operate as “insurance agencies” primarily focused on driver partners (and use them as
“beta testers” before roll-out to their respective customer bases). Similarly, the “driver partner”
analogue for Flipkart is its “merchant network”.

2. The “Amazon” insurance model (aggregation)

a. To be completely honest, e-commerce companies using preferred partnerships for
warranties/goods-in-transit insurance is not new.
b. Personally, I think the “price aggregator” play (if any) would result from JioMoney
and not JioMart; hence, let’s wrap this section up.

To summarize, JioMart could serve as a “platform” to sell insurance to its merchant

network; like Flipkart’s current model which has parallels to the Ola Insurance x Ola
and Grab Insure x Grab models respectively.
WhatsApp as the lynchpin
You would have guessed that the Facebook x Jio partnership is centered around WhatsApp; from
an insurance perspective, there are two opportunities:

“Kirana store as an InsurTech company”

Some of you may be familiar that JioMart has a strong offline presence which is augmented by its
network of “Kirana stores” (i.e. corner shops). Post the Facebook investment, JioMart rolled out a
pilot with 6,000 stores to test WhatsApp-based ordering. [20]

In an earlier post, I had highlighted how ShopKing and PayNearby Technolgoies are experimenting
with this model. Some points to remember are:

a. The scope of micro-insurance products sold by PoS (Point-of-sale) agents e.g. Kirana store
owners is set to expand (currently in review)
b. Based on the comments I received, there is a split view regarding the efficiency of Kirana
stores to distribute insurance, the highlights were:
• Insurance is a push product which requires guidance; Kirana store owners are used
to pull purchases with little guidance.
• Opportunity cost: Insufficient margin on micro-insurance product to justify the time
spent to guide the purchase.
• Educational/operational challenges: Would the Kirana store be able to support
during the claims journey?
c. However, supporters of the Kirana store led distribution model highlighted that Kirana store
owners provide a “layer of trust”. Despite their individual shortcomings, a centralized
WhatsApp-first support center could be the missing piece in the puzzle.

Leveraging its O2O2O expertise could allow Jio (via JioMart and WhatsApp) to
enable Kirana stores to become PoS distributors of insurance in India
The WeChat Mini-Program model
WeChat’s mini-program ecosystem is widely known (think of this as an app inside an app;
appception?) [21] With the Facebook investment into Jio, WhatsApp could become the “hub” in
the “hub & spoke” model. I think WeChat’s mini-program ecosystem is well documented but there
are two types of mini-programs – 1st party and 3rd party

1. 1st party model

a. Tencent owned WeChat is the home of WeSure (Tencent’s insurance venture)
b. Launched in 2018, as of October 2019, WeSure has 55M customers [22]
c. WeSure is like Toffee Insurance/InsureFirst in that it “designs” & distributes
insurance products underwritten by insurance companies. However, it differs in that
WeChat is its sole distribution channel.

2. 3rd party model

a. AXA Group owned AXA Go is a mini program that operates on WeChat. [23]

So, will Jio launch a “Jio Insure” mini-program on WhatsApp or will it just remain
a 3rd party insurance play? I’d love to hear your thoughts

JioMoney (or WhatsApp Pay?)

To be honest, I don’t know what will happen to JioMoney after the Facebook investment – will it
remain standalone from WhatsApp Pay (which already faces huge regulatory issues [24]) or whether
WhatsApp Pay & JioMoney will merge

Either way, the Facebook investment into Jio makes me realize that the insurance
category killer play might be lurking in plain shadows (hint: Xiang Hu Bao by
AliPay i.e. mutual aid plays)

Mutual aid platforms are widespread in China; they bring back the old insurance concept of
“mutualization of risks” (i.e. losses borne by members of a community are spread amongst the
community members); now if you’re a sophisticated insurance professional, you know this is exactly
what insurance does today, but, in a “black box” style.

Some international examples for you to review are:

a. Xiang Hu Bao by AliPay

• Launched in October 2018, it got 20M customers in its first month.
• With ~ 110M enrollees, Ant Financial anticipates that the “mutual aid” market in
China to expand to 450M customers by 2025. [25]
b. Shuidihuzhu (Waterdrop Mutual) – a Tencent investee
• Launched in 2016, it has 70M customers as per its website.
• Unlike Xiang Hu Bao, Shuidihuzhu also has a crowdfunding (donation) platform and a
traditional insurance brokerage arm.
Please note that the mutual aid structure might become “legal” in India subject to the IRDAI micro-
insurance commission recommendations (2020); there are some technicalities (e.g. reinsurance stop-
losses, organization structure, claims handling etc) which I will avoid in this discussion.

In India, the wallet-based insurance distribution model is finally emerging – Paytm is a leader;
MobiKwik and PhonePe are not far behind. Below are some details on Paytm’s foray into insurance
which could be emulated by Jio

Specifically, by virtue of having the Account Aggregator license, Jio Pay would be able to “push” the
right insurance products to its captive audience (i.e. income and spending based recommendations)
and could perhaps become a version 2.0 of “price aggregation”. To be completely honest, insurance
in the context Account Aggregator framework is voodoo magic; but, if you find it interesting, I could
write a separate piece

To summarize, Jio Pay could certainly foray into insurance via the “mobile wallet
insurance” operating model since it is well documented in China with emerging
examples in India. Further, its Account Aggregator license gives it an edge over
most e-wallets foraying into insurance.
Will Jio become an insurance company?
I’ve heard this question a couple of times – I’d imagine this is driven by the fact that Anil Ambani’s
vehicle Reliance Capital owns Reliance General Insurance and a stake in Reliance Nippon Life
Insurance.

Whilst I can’t predict the future, let me present both sides of the argument

Why Jio might want to become an insurance company:

1. Economies of Scope
a. Whether it is Amazon with its own goods, Grab partnering with SingTel to get the
Hong Kong virtual bank license; there are limits to horizontal expansion for every
marketplace or super-app.
b. At some point, going “vertical” or “deep” in an ecosystem, allows an aggregator to
capture more value from an existing customer base.
2. “Non-traditional” insurance licenses
a. Hong Kong is a great case study – “virtual insurance companies” (as per the HKIA)
are allowed to operate only via digital channels (no offline presence). [26]
b. Alternatively, “limited operation insurance companies” such as the Small Ticket
Insurance company regime in Japan [27] are attractive.

The primary advantage of owning an insurance license is the flexibility in product design (e.g. Acko
Insurance). However, you could argue with Jio’s customer base, they could “coerce” any insurance
company to design custom products.

(Also, if you’re a sophisticated insurance professional, please don’t comment on the reinsurance
dependency of new primary carriers; it is a nuanced discussion and with Jio’s locked-in distribution,
you can argue it wouldn’t be a hold-back.)

Given the demographics of Jio’s customer base, the upcoming IRDAI regulations
which propose a “standalone micro-insurance company” might be the silver
bullet for Jio to go vertically deep in insurance without coming into conflict with
incumbent insurers.

Why Jio won’t become an insurance company:

1. Broker’s business model is superior

a. 1st year commissions can vary from 10%-15% in general insurance; contrast this to
most carrier’s top line (the “loss ratio”) which is often negative! (Investment income
is a driver of returns, if any, for insurance companies)
b. Intermediaries have an asset-light model – will Jio undertake another round of debt
financing? I’m not sure
2. Indian super-app forays into insurance
a. Insurance regulation varies by country (e.g. India has caps on foreign ownership in
primary carriers but no cap on foreign ownership in insurance intermediaries)
b. Ola Insurance, Paytm, PhonePe, AmazonPay etc operate as corporate agents or
brokers; it’s quite likely that Jio too would prefer to go down this road.
Could it be health insurance?
In the previous section, I presented both sides of the argument regarding Jio acquiring an insurance
license. This section (added later on 23.05) will touch upon why health insurance could be Jio’s
wedge into the insurance industry.

On 20.05, Reliance Industries owned Nowfloats announced its (WhatsApp enabled) tele-medicine
service; with an ambitious on-boarding target of 100,000 medical practitioners, Nowfloats has
already on-boarded 6,000. [28]

As you’d imagine, Covid-19 has supercharged tele-medicine in India and provided guidelines [29] (a
rare case of regulatory guidance providing “positive signaling” to customers). However, tele-
medicine is increasingly becoming a core component of health insurance.

In fact, from a product perspective, insurance suffers from a lack of “tangible” benefit and infrequent
customer touch-points. Jio could position itself as a “service-provider” (via Nowfloats) for existing
insurance companies (e.g. Practo x ICICI Lombard [30]) or bundle health insurance into the offering.

Conclusions
Hopefully this write-up has given you some context on Reliance Jio and (more importantly) the 4
operating models for Jio to explore in insurance. As a brief recap, the operating models are:

3. Telco-led insurance distribution

4. E-commerce led insurance distribution (via JioMart)
5. “Hub & spoke” centered around WhatsApp (both offline & online)
6. E-wallet insurance distribution (via Jio Pay or WhatsApp Pay)

Each of the above models has its pro’s and con’s; I can’t guarantee you which model (or which
combination of the above), Jio will foray into insurance with but I’m certain Jio will enter insurance
at some point.
 I’d love to hear your thoughts on whether Jio will enter insurance or not. If so,
which model(s) would Jio adopt? I invite your feedback, criticism and comments.

If you’d like to explore a SWOT/PEST analysis of each of proposed operating models, feel free to ping
me. Alternatively, if you’d like to hear about a 5th model (“mutual aid”) which Jio could adopt, feel
free to let me know – I’d be happy to write a Part II

About the author

Rahul is the Start-up lead at Accenture’s FinTech Innovation Lab in London.

Prior to joining Accenture, he was an Insurance Product Manager at Laka Insurance,

a London headquartered early stage InsurTech start-up which won at the
British Insurance Awards 2019.

Rahul holds a master’s degree in Statistics from the University of Warwick. Having
spent his childhood in Mumbai, he is passionate about InsurTech in India! He is an
Ambassador at the Asia InsurTech podcast; do reach out via LinkedIn or Twitter.

Disclaimer
Views expressed in this article are my own and do not represent those of Accenture, its
management, its employees or its affiliates. This article does not constitute investment or any other
form advice. The author bears no responsibility in the event of financial or other loss arising from
actions taken by the reader or any related party on the basis of information represented in this
article. The author does not have any financial interest in any firm mentioned in the article above
with the exception of Reliance Industries (the parent entity of Reliance Jio). This article is produced
for educational purposes. For any further queries or complaints, kindly email the author at
rahul.j.mathur@gmail.com (personal) or r.d.mathur@accenture.com (work).