In a recent interview, Natraj Nukala, Founder of Kshema, the fully digitally powered Indian agricultural insurer, explained to Reinsurance News how the company is taking advantage of a capacity shortfall and leveraging advanced technology to bring vital insurance solutions to those in need. “There is a lot of reinsurance supporting India agriculture today, but in terms of growth, it is shrinking. So, companies like ours come into the picture and bring new premium into the system, which the current reinsurers are not able to support due to a lack of capacity,” said Nukala. Expanding on this, Nukala said, “There is space for participation from new domestic insurance companies along with GIC and other global players. For players like ourselves, availability of more domestic reinsurance capacity will make business and growth more efficient” Nukala is of the opinion that portfolio diversification and technology are the two key positives for investing in the Indian market today. “India is a large country with diversified datasets,” he explained. “So, when we are added to an existing portfolio of a reinsurer which does not have any exposure in India, we help in diversifying their portfolio better and enhancing their returns. We provide that diversification.” “For example, a cyclone in India doesn’t mean that something is happening in the Philippines at the same time. The bottom line is that Indian business can be a great diversifier,” added Nukala. Kshema registered with the Insurance Regulatory and Development Authority of India in November 2022 and subsequently had its license issued. The company’s operations are fully digitised. Nukala described the insurer’s model as easy-to-use, where the farmers are directly encouraged onto an onboarding process for the company application, which has been enabled in 11 regional languages. It also boasts a customer centric application, where a client can decide the natural perils they want to be insured against. Nukala also highlighted the important role of some of the backend technology, where the pricing and loss assessment takes place through data sources that are both API and satellite driven. Expanding on the technology point, Nukala stressed, “Companies like us that are completely digitally driven, we are able to get our PML ratios in almost near real-time. I can analyse and see what my portfolio is looking like and how it is performing. So, companies like us, which are totally built on and dependent on the entire infrastructure being technology-led, gives us greater transparency in the entire business. These are the two major advantages that I see for participating in the Indian marketplace.” Of course, India, like many parts of the world, is still extremely underpenetrated in terms of insurance, but companies like Kshema serve as a bridge to lessen the protection gap that exists in the market. India as an economy has a higher purchasing power in rural sectors, that has so far been untapped due to the lack of infrastructure, although efforts by Kshema and others has started to change this. The two major perils faced by Indian farmers are drought and cyclones. Kshema insurers against “All act of God perils”, and the company has products for 9 perils with different levels of settlement. Ultimately, Kshema’s aim is to use its deep expertise to help farmers who are dependent on essentially all regional crops, fruits, vegetables, or spices.
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