In a recent interview with Reinsurance News, Natraj Nukala, Founder of Kshema, the fully digitally powered Indian agricultural insurer, stated that the company is not afraid of competition entering the Indian market post easing of regulations by the Insurance Regulatory and Development Authority of India (IRDAI).
In March of this year, the IRDAI announced the approval of eight principle-based consolidated regulations, designed to propel the country’s insurance sector towards greater efficiency and effectiveness, leading towards the vision of “Insurance for All” by 2047.
This milestone in regulatory governance will allow for the approval of larger numbers of insurers and reinsurers to be established to manage the existing protection gap in the Indian insurance landscape.
Nukala agreed that the entry of these companies would contribute to closing the bridge between the insured and non-insured, which is something the company has aimed to do since its founding.
“I personally think that given the size of our population, where we make up approximately 20% of the global population, we could use another hundred companies,” said Nukala.
The founder explained that with the gap between the insured and non-insured so big across India, there’s only so much smaller companies can do. Ultimately, there’s a disparity between the number of insurers in India and the need for protection.
“Though that is exactly why we’ve been given a license,” said Nukala. “We are bringing the uninsured into the system. Inclusion is the primary focus during our process and approach. We want to get the entire country insured.”
Currently, Kshema products are available across 20 states and 2 union territories in India. Since the company’s inception, it has generated gross written premium of $68 million. The success of the agricultural insurer has been credited to its parametric nature and technology.
Rajeshnani Dasari, Independent Director, Kshema, commented on the improvements made by Kshema in the underwriting process over the last year, “We have automated that whole underwriting process wherein we can go to the document or to the authoritative source provided by farmers seeking insurance to make sure that individual actually owns the land.”
For companies like Kshema, Dasari explained that one of the key risks is making sure the farmland being insured has been utilised for the stated purpose, an issue which has seen the agricultural insurer correct past policies.
“We have automated that whole process to identify what percentage of that land is available and that makes our underwriting process foolproof,” explained Dasari. The number of people insured by Kshema is approaching the one million milestone, and the executives explained how recent technological advancements have driven successful renewals in 2024.
Nukala stated that Kshema has so far insured over eight hundred thousand people, and they have seen in this April renewal cycle how rate and terms got better. He attributed this to the improvement in technology that took place within the firm over the last year.
Nukala further elaborated, “These features that we’ve built have been appreciated by the reinsurance folks especially. The dashboards that we have set in place that give almost near real time information along with the other enablers that we put in place in the last year to be able to partner with more reinsurance companies.”
Commenting specifically on the renewals, he explained how Kshema’s parametric nature has enabled it to fill a gap in the Indian market that reinsurers have been looking for.
“We have partnered with both state and private reinsurers who are more aligned with our long-term goals and how we are more climate friendly.
“Parametric has a lot of appetite, scope and it gels well with our audience. Through parametrics we have been able to identify the tail-end risks, the large, extreme events, by partnering with institutions that help us forecast these extreme events,” Nukala stated.
Kshema’s goal is to adequately price its risks rather than being worried about them. Nukala noted that he is not concerned about secondary perils since they have been so far adequate in both pricing and forecasting them.
