Insurance for Businesses:
A Cost or a Revenue Opportunity?
Insurance penetration among businesses (large corporates, SMEs and startups) in India has been critically low in the past decades despite insurance being an effective risk management tool and Indian population being strongly risk averse. There have been a few reasons for this:
1. High Insurance Costs
2. Poor Claim Services
3. Improper Underwriting of the Risks
4. Unavailability of innovative solutions tailored for businesses or an industry
These all reasons have culminated in a mindset among businesses, particularly SMEs & startups, that see insurance as a cost and ultimately a burden rather than an opportunity. Through this blog we try and resolve this issue for you and present you a solution where Insurance for your operations will not be a cost but rather a revenue generating opportunity.
We answer the question that is Insurance for Startups a Cost or a revenue opportunity?
Insurance as Cost
Businesses have multiple insurance needs to
1. Safeguard their assets - Property/Asset/Stock/Factory Insurance or more commonly Fire Insurance
2. Safeguard goods in Transit - Transit or Marine Insurance for Domestic, Import or Export Transit
3. Safeguard against Legal Liabilities - General Liability, Third Party Liability, Directors & Officers Liability etc.
4. Safeguard health of employees - Group Health Insurance, Group Personal Accident Insurance, Group Term Life Insurance
Ultimately, in order to secure these assets, goods & liabilities, the companies pay these costs to insurance companies and insurance becomes a liability on the business. In areas of EXIM (Export & Import) where the insurance is compulsory, cost of insurance becomes cost of doing business. Overall, the view towards insurance is inherently negative considering the levels of service being average at best.
A push, therefore, is required for companies to see insurance in a positive light irrespective of the levels of service. Of course, the costs must go down, the service levels must increase and underwriting must improve but all that requires financial assistance to insurance companies. This push to insurance companies can come only from corporates willingly working with them. The only way for businesses to willingly work with insurance companies is if they see benefits in that.
Insurance as a Revenue Stream
The best way to change the perception of insurance from negative to positive and make businesses willing participants in the insurance industry is to involve them by offering them benefits. The best benefit for any business, especially cash-strapped SMEs and startups, is MONEY. So, designing insurance products in a manner that they generate revenue by further offering these to their clients is the best solutions. Ultimately, the end consumers are as it is the actual beneficiaries of the insurance sought by businesses. Putting a number to these services in a formal manner allows businesses to generate revenue from them while not actually getting in the core of the business.
As an example, consider a Transporter who has requirement of Transit Insurance for Goods that are in Transit through them. The transporter currently seeks this insurance and pays a cost without actually having any way of offering the clients an option or a proof of insurance. Through Insurance products Underwritten by J-Insurance team, the transporter is able to generate certificates of insurance each time the customer opts to insure their goods. By offering these certificates of insurance under their umbrella policy, the transporter is able to offload costs to the end consumer and generate revenue by selling these certificates of insurance at a price they deem fit. The insurance company by selling the insurance in bulk volumes is able to generate high revenues through a single sale and is, thus, able to lower its Customer Acquisition Cost. The end consumer is able to utilize this bulk purchase of the transporter by taking insurance at a rate lower than what is generally available to them in the market. Furthermore, the transporter has a direct control over all the claims and is able to effectively manage their claims to avoid high loss ratios and rising insurance costs. In all this is a Win-Win situation for all stake holders involved.
How J-Insurance supports businesses to insurance as a revenue generating opportunity rather than a cost
J-Insurance is the first company in India that is underwriting products for the corporates that enable the corporates to further generate revenue from them. The emphasis for J-Insurance is to Underwrite products and enable businesses to sell insurance. We provide end-to-end support to businesses through our business in a box solution. J-Insurance provides access to its portal which enables businesses to sell insurance. We provide a 24*7 support to the businesses with dedicated helplines for their customers for claim assistance.
J-Insurance solutions have become a huge hit for businesses that our looking to grow.
Is your company still just another company or is it company JI (JI = J Insurance)? Finally, do you see insurance for you company as a cost or a revenue opportunity?
