NBFC-Insurance Synergy - Seize The New Wave
Banks have always been at the center of partnerships with other financial sectors, be it mutual funds or insurance or NBFCs. Now a new pattern is emerging and scaling rapidly. That is the partnership between NBFCs and insurance companies. The numbers are there to substantiate the growth of both these sectors. What is interesting is that they are finding synergy with each other to engage with each other’s customer segments.
Witness some of the recent tie-ups. Kerala based Muthoot Finance and Bengaluru based Digit Insurance tied-up to promote micro-insurance products. The partners are collaborating to provide affordable health and accident insurance tailored for lower-income groups, which will be seamlessly bundled with Muthoot’s popular gold loans. Given Muthoot’s gigantic customer base, the opportunity is huge for Digit Insurance.
Can health insurance be ignored? In another impactful alliance, Kerla based Manappuram Finance and Gurugram Care Health Insurance integrated health insurance with gold loans. The collaboration aims to penetrate the market of underserved individuals and families by providing health insurance coverage to customers availing gold loans.
Pune based Bajaj Finser v and Bengaluru based Acko General Insurance have pioneered digital-only insurance solutions. Leveraging Bajaj Finserv’s extensive distribution network, this collaboration focuses on delivering innovative, customer-centric insurance products, thereby enhancing financial protection for the middle-class segment.
So what is in it for farmers. Mumbai based L&T Finance and HDFC Ergo have joined forces to provide integrated crop insurance solutions. This initiative combines L&T Finance’s extensive rural reach with HDFC Ergo’s agricultural insurance expertise, aiming to safeguard farmers against weather anomalies and crop failures.
Collaborating to offer a holistic financial solution, Mumbai based Piramal Capital & Housing Finance and Gurugram based Policybazaar created an online platform offering insurance and credit products. By leveraging Policybazaar’s online presence, Piramal Capital aims to simplify the financial journey for consumers, providing a comprehensive solution for insurance and loan needs.
Mahindra & Mahindra Financial Services announced that it will enter the life, health and general insurance business. The company will initially invest `5-10 crore towards technology, hiring training and certification.
These collaborations exemplify the symbiotic relationship between NBFCs and insurance firms, working together to expand financial inclusion. For instance, Edelweiss General Insurance partnered with NBFC Avanse to provide student travel insurance, empowering overseas academic aspirants with comprehensive coverage against medical, stay, and travel-related issues.
Similarly, New Delhi based Niva Bupa Health Insurance collaborated with Gurugram based Swara Fincare, an NBFC, to democratize health insurance in rural India. This partnership aims to bridge the healthcare accessibility gap in rural areas, where less than 20% of the population currently has health insurance.
In a strategic move, Ahmedabad based Ratnaafin obtained licenses as an NBFC and insurance broker, positioning itself to provide much-needed financial services to small businesses and startups affected by the covid-19 disruptions. With a vision to offer comprehensive financial solutions under one digital platform, Ratnaafin aims to optimize deal discovery, credit analytics, and decisionmaking algorithms.
The positive impact of these collaborations is evident in increased reach, customized products, enhanced financial literacy, and the ongoing digital transformation. These partnerships are commendable strides towards greater financial inclusion, and seem to have the buy-in of the regulators as well.
In conclusion, the collaborations between NBFCs and Insurance companies represent a strategic alliance working towards deeper financial inclusion. As India progresses towards greater financial inclusion, these collaborations will likely play a pivotal role in shaping the future of the financial services landscape.
Banking Frontiers (published by Glocal Infomart Pvt Ltd) is organizing its annual InsureNext Conclave on January 24, 2024 at Hotel Sahara Star. A large number of insurance companies and insurtechs will be present at this conference.
This is a golden opportunity for NBFCs to meet the key people at the insurance companies and explore partnerships. If you are an NBFC and wish to join this conference, please register here: