Plum Insurance, a company backed by Tiger Global, has recently announced its entry into the business insurance sector. The insurtech firm aims to target startups and small and medium enterprises (SMEs) with comprehensive coverage for various risks, including financial, operational, legal, people, and governance. Plum’s CEO, Abhishek Poddar, believes that while many insurance companies primarily serve larger organizations, there is a significant need for business insurance among startups and SMEs.
Initially, Plum Insurance focused on providing employee insurance and health benefits when it was founded in 2019 by Poddar and Saurabh Arora. However, they have recognized the challenges faced by startups and businesses in terms of corporate governance, leading them to make the strategic decision to expand their offerings to include comprehensive business insurance coverage. The goal is to help businesses protect their people, profits, and runways, while also building trust and confidence among stakeholders.
Currently, less than 2-3% of organizations are aware of and avail business insurance coverage, indicating a vast market potential. Poddar estimates that the market will grow tenfold over the next five years. While Plum will face competition from firms like Digit, Probus, and PaisaBazar in the business insurance space, this expansion presents cross-selling opportunities for Plum, which already serves approximately 3,000 customers in India.
Plum Insurance recently raised $15.6 million in a Series A funding round led by Tiger Global in May 2021. The company plans to achieve positive EBITDA within the next 12-15 months and aims for 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 equally contribute to their revenues in the long run.
To enhance operations and customer experiences, Plum is utilizing generative AI technology. They have introduced a tool called PolicyGPT, which utilizes conversational AI to assist customers in understanding their policy documents. With substantial revenue growth in mind, Plum’s long-term goal is to achieve revenues of at least Rs 10,000 crore before expanding to other countries. Despite recent staff layoffs to streamline costs, Plum plans to hire additional staff to support their growth initiatives.
In summary, Plum Insurance’s entry into the business insurance market aims to cater to the specific needs of startups and SMEs. By tapping into the potential for growth and providing comprehensive coverage, they aim to protect businesses from a range of risks. With their recent funding and strategic plans, Plum is positioning itself to become a key player in the business insurance sector, serving the needs of Indian startups and SMEs.
