Digit Insurance eases SME property cover using automation

Mumbai: Thousands of small and medium enterprises (SMEs) are not covered by property insurance as the premium is too low for agents to make multiple visits.

Now, new-age insurer Digit Insurance has made it viable to provide a cover to such small businesses by automating the underwriting process. It has integrated various underwriting inputs, such as flood risk maps, with its software. This makes it possible for banks and agents to issue policies across the counter.

“The problem with small businesses was that the pricing was extremely granular and depended on multiple factors. These included occupancy, location, and whether there was a basement involved as flood risks are extremely severe for small businesses. Also, a lot of data was not available previously,” said Digit Insurance chairman Kamesh Goyal.

He added that because of multiple factors that had to be taken into account while underwriting a proposal, the policy issuance would take two-three days. What has changed is that financiers are collecting much more data, and plugging into banks through an application program interface (API) enables the capturing of information from borrower accounts.

As banks themselves are digitising lending to SMEs, Digit is seeing a large opportunity in this segment, which was hitherto ignored by insurers. Additionally, small businesses are now more conscious of the risks, given frequent floods. “Globally, regular occurrence of extreme weather events is becoming the norm. We are seeing more of floods, hurricanes or forest fires. Since most of these events are separate incidents, they are not covered under reinsurance programmes for catastrophes,” said Goyal. This would increase the need for SMEs to go for such a cover. The digital approach has also enabled the company to crunch the fire insurance claim settlement time to 14 days instead of a couple of months.