Agrenovera-2021

Round-2

Instructions:
1. This is a live case. Hence, please make appropriate and accurate
assumptions if required.
2. Different sources like research databases can be consulted; however,
appropriate sources need to be provided.
3. Try to attend to all the problems mentioned in the case. Appropriate
primary research can be done to derive extra insights; however, such
information will have to be provided fully to the firm before the delivery
of your final presentation.
Mr Ragu, a small farmer from the Rural village of Surera, was surprised to know about the
availability of crop insurance at an affordable price when he listened to Mr Vijay, the retailer
from whom he usually buys his farm inputs. Mr Vijay, who has recently enrolled as the Point
of Sales Partner (PoSP) of XYZ insuretech firm, was explaining the crop insurance schemes
available. When Ragu signed the document after paying the insurance premium to Vijay, he
felt a sigh of relief overcoming his scars of losing a majority of the harvest to flood the
previous season and felt optimistic towards the upcoming season.
While at the headquarters of XYZ insuretech, its co-founder and CEO, Mr Kumar, was
thinking of the last few years, which have been challenging as well as rewarding for the
company. He was satisfied that the company had found the first level of comfort on the
technology platform. But he was also aware that it is time to expand out of the comfort zone.
He felt determined and optimistic as he charted out the plan to grow their network a 100X by
rapidly scaling the company’s POS network to 2.5 lakh partners in the next four years, having
one partner in each gram panchayat in India. He was wondering how they are going to
achieve this as he started exploring the options available in front of him.
Company background and history:
XYZ is an insuretech firm focused on creating insurance access for rural India. Having
started their journey in 2018, the company has seen great traction in the last few years. In FY
18, they started their journey by insuring 1000 customers and by FY 21, they have insured
more than 16 lakh customers. In the process, they have crossed an important milestone of 100
crores of premium accretion and have also created a network of more than 2500 Point of Sale
Partners (POSPs).
Market overview:
India is significantly underinsured. In terms of insurance penetration, we are at 3.7%, almost
one half of the global average, and in terms of insurance density, we are at 75 USD, almost
one-tenth of the global average. When it comes to rural India, the scenario is even more stark.
Despite a lot of focus from the government and the regulator to bring access to insurance to
rural India, significant moving parts of the rural economy are not insured. Be it crop (60% of
gross cropped area is not insured), livestock (90% of livestock population is not insured), life
insurance or health insurance (~ 65% of health-related expenses are out of pocket). The
challenges associated with creating insurance access for rural India include low awareness,
low literacy levels, lack of the right set of products, low premium paying ability and to a
certain extent, the level of trust in the insurance ecosystem. While on one hand, these are
formidable challenges, on the other hand, it’s a huge opportunity for a startup who can crack
the code since ~70% of India’s population is still rural and close to 900 million people even
today have no/little access to insurance, making it, in fact, a white space opportunity.
The Business Model:
XYZ follows an assisted tech model whereby they create Point-of-Sale-Partners (POSPs)
whom they train and certify in life and/or general insurance and in using technology so that
they can become the access points of insurance for the rural consumer.
Early on in their journey, the team realized that while access to the Internet and data had
become more commonplace even in rural areas with the advent of more players in the
telecom space, most of the use cases for the rural consumer related to consumption of content
rather than doing financial transactions online in a DIY format especially for something like
insurance which was not intuitive or simple in its current avatar. At the same time, the team
was equally aware that it would be imperative to leverage technology to reach out to the
largely dispersed rural population in a seamless and effective manner. The startup decided to
follow the Point-of-Sale Model recommended by the regulator.
Under this model, the startup created its in-house application, which would act as the nodal
point for the point-of-sale partners. At the back end, the startup did API integrations with
multiple insurance companies to effectively put multiple insurance products and companies
on their platform. They also tied up with multiple partners to create multiple premium
payment options, including credit cards, debit cards, UPI as well as a closed-loop wallet for
the point-of-sale partners. On the front end, they leveraged technology to seamlessly onboard
the customer information using QR code scanning, OCR and other modes so that data entry
errors as well as time to generate the proposals could be minimized.
PoSP onboarding and training:
For the point-of-sale partners, the company created various facilities to streamline
onboarding, training and certification modules and a first of its kind real-time remuneration
module to ensure that the point-of-sale-partners were duly served and could focus all efforts
on client engagement and insurance distribution.
For onboarding, the company have followed two models so far. Approximately 70 per cent of
PoSPs are members of entities that have the last mile connect with rural consumers and are
involved in various services like Agri inputs, agri-advisory, etc., but with no exposure to
insurance services. The remaining 30 per cent of the point-of-sale-partners are in-house
partners created by the XYZ startup team. The training provided to the PoSPs included
training about both general and life insurance. Explanation videos on how to use the app for
policy transactions are also shared with them. For the PoSPs, the company’s in-house mobile
app is the only requirement that they would need to do an end to end transaction.
The way ahead:
XYZ insuretech has attained a product-market fit in terms of their business model and has
created a network of 2500 partners in the last one year. Having found the first level of
comfort on the technology platform, the company now wishes to rapidly scale their POS
network to ~ 2.5 lakh partners in the next four years, in principle having one partner in each
gram panchayat in India. This means growing their network a 100X in the next four years.
The company is critically focused on rural India and, with that objective in mind, is very keen
to grow its partner network quickly and efficiently in the next four years.
The company is looking to answer the following questions with respect to their partner scale-
up,
• What is the profile of the PoSP that they should target?
• What is the best way to reach out to these PoSPs to engage with them and onboard
them with the company?
The company is considering the following three modes as options to attain its objectives
• Direct to PoSP (in house channel)
• Connect to PoSP through organizations having last mile connectivity networks
• Identification of government programs on rural development
As Mr Kumar was pondering over these questions, he was wondering which of the options
would be more suitable to attain the target and if there are any more ways that are left to be
explored.
Exhibits:
Exhibit 1: Assumptions to be made,
1. Existing partners (PoSPs) in 2021: 2500 partners
2. Target: To create 2.5 lakh partners in the next 4 years
3. Revenue share with PoSPs: For any transaction, they do the PoSPs will get 80% of the
revenue made by the startup. They work on a completely variable basis. Hence, the
average revenue made by the startup is 20%. It can vary from product to product.

Exhibit 2: Year-wise targets (PoSPs):

Year Target
2021 2500 (actual)
2022 10000
2023 40000
2024 120000
2025 250000

Exhibit 3: Revenue share of products:

Year Product % of total revenue
2021 Crop Insurance 90%
Non-crop insurance 10%
2025 Crop Insurance 30%
(Expected)* Non-crop insurance 70%
*The company aims to diversify away from crop insurance in the future.