Fintech lender ZestMoney is now taking up another role—that of a corporate insurance agent. The startup has received a corporate agent licence from the Insurance Regulatory and Development Authority of India (IRDAI) and is in talks with insurance firms for tie-ups, industry sources have told Moneycontrol.
The Bengaluru-based company, which counts Goldman Sachs, Quona Capital, Xiaomi, Alteria Capital as investors, has been largely focused on the Buy Now Pay Later (BNPL) credit offering space.
When contacted, Lizzie Chapman, CEO and Co-founder, Zest Money, confirmed the development. “Our customers are not targeted by all the traditional financial services brands be it for insurance, credit or savings. So, there is a huge opportunity to design products for them, especially if they already trust you with one part of their financial life. We see insurance almost as the next extension of our BNPL product,” she said.
As per IRDAI regulations, corporate agents can tie up with a maximum of three life, three general and three health insurers to solicit, procure and service their products.
The norms also mandate that the registered corporate agent must disclose its tie-ups to IRDAI within 30 days of entering into these arrangements.
ZestMoney is said to be in talks with insurance players and may formalise the tie-ups soon. “The company is in talks with 12 insurance companies, of which it can finalise agreements with nine,” the sources said.
The insurance firms will work with ZestMoney to co-create tailor-made insurance schemes to offer alongside its BNPL products.
In return, the company will receive a distribution fee from the insurance players. The aim is to provide sachet-sized insurance for mainly Tier-II and Tier-III customers. As many as 70 percent of the company’s 11 million registered customers are from outside metro cities.
The company stepped up interaction with customers during the coronavirus pandemic to understand how they were coping with its financial impact. The results showed that a large chunk of the customers did not own any insurance products.
“We will serve as the pipe between the insurance companies and the customer, just as we do in BNPL. We can use exactly the same technology, platform and app to be the bridge for these customers into the traditional world of insurance,” Chapman added.
According to Swiss Re data, insurance penetration in India stood only at 4.2 percent in FY21, as compared to the world average of 7.4 percent.
Insurance density, which is premium per capita, stood at $78 for FY21 against the world average of $809.
With this licence, Zest Money joins the likes of Policy Bazaar, Amazon Pay, Paytm Money and LendingKart that offer insurance online.
Insurance broker Policy Bazaar is the leader in the digital insurance marketplace with a 93.4 percent market share in terms of the number of policies sold. Amazon Pay secured the corporate agent licence in 2019, and Paytm got the insurance broking licence in March 2020 after giving up its corporate agent licence.
ZestMoney is a leader in the BNPL space, with a merchant network of over 10,000 online and 45,000 store partners.
It has tie-ups with players like Amazon, Flipkart and MakeMyTrip to enable digital credit line to customers.According to a Bernstein report, India’s BNPL market is at $15 billion and is likely to grow to a $100-billion opportunity by 2025. The report envisages fintech BNPL players to constitute around 26 percent of the total market by 2025.