Plum Insurance Enters Business Insurance, Targets Startups And SMEs
Plum Insurance, a Tiger Global-backed insurtech firm, has announced its foray into the business insurance segment, targeting startups and small and medium enterprises (SMEs). The company aims to expand its revenue streams by offering coverage for various risks, including financial, operational, legal, people, and governance. According to Abhishek Poddar, the CEO of Plum, many insurance companies primarily serve organisations with a larger employee base, but there is a significant need for business insurance among startups and SMEs.
Plum Insurance, founded in 2019 by Poddar and Saurabh Arora, initially focused on employee insurance and health benefits. However, recognising the challenges faced by startups and businesses in terms of corporate governance, Plum has made the strategic decision to provide comprehensive business insurance coverage. By doing so, the company aims to help businesses protect their people, profits, and runways, while instilling trust and confidence in stakeholders.
The market potential for business insurance is substantial, with less than 2-3 per cent of organisations currently aware of and availing such coverage. Poddar estimates that the market will grow tenfold over the next five years. Plum will face competition from firms like Digit, Probus, and PaisaBazar in the business insurance space. However, the expansion into this segment presents cross-selling opportunities for Plum, which currently serves around 3,000 customers in India.
Plum Insurance raised $15.6 million in a Series A funding round led by Tiger Global in May 2021. The company plans to turn EBITDA positive within the next 12-15 months and aims to achieve an annual recurring revenue of Rs 100 crore in the next two years, accompanied by free cash flow. Poddar stated that each of their business lines, including employee health benefits and business insurance, should contribute equally to their revenues in the long run.
To enhance its operations and customer experiences, Plum is using generative AI technology. The company has introduced a tool called PolicyGPT, which uses conversational AI to assist customers in understanding their policy documents. With their sights set on substantial revenue growth, Plum's long-term goal is to achieve revenues of at least Rs 10,000 crore before expanding to other countries. Despite a recent round of layoffs to streamline costs, Plum plans to hire additional staff to support their growth initiatives.
Overall, Plum Insurance's entry into the business insurance market aims to cater to the specific needs of startups and SMEs, tapping into the potential for growth and providing comprehensive coverage to protect businesses from a range of risks.
