Bangladesh, a nation of over 170 million people, faces a stark reality: more than 90% of its population lacks insurance coverage. This also reflects insurance's contribution to GDP which stands at meager 0.46% in Bangladesh, compared to 4.2% in India and 0.91% in Pakistan. Understandably, insurance remains a luxury for the privileged few. For the majority, healthcare expenses are a crushing burden—often outstripping annual incomes. As Shawon Shahriar, the co-founder and CEO of digital microinsurance platform Chhaya noted, "A significant portion of Bangladesh’s population—a staggering 25% households—spends more than their annual income or what they can afford on healthcare, while 5% households cannot afford it at all. With 97.5% of the population lacking health insurance coverage, the market presented both a challenge and an opportunity."
Bangladesh’s insurance market is characterized by high premiums, complicated policies that general people struggle to understand, and limited accessibility. Traditional insurance products, often expensive and laden with complex terms, are out of reach for most.
The few who do have coverage are typically corporate employees with employment benefits and a segment of the upper class and upper middle class, leaving the vast majority—informal workers, small business owners, and low-income families—without a safety net.
This gap in health financing forces many to forgo proper medical care, resorting instead to quick fixes at pharmacies or self-medication.
It was against this backdrop that Chhaya, the micro-insurance platform whose CEO we quoted above, was born. The founders of Chhaya, having worked in the health tech space, recognized the potential of microinsurance to address this critical need. Their vision was clear: to create an insurance model that was affordable, simple, and accessible to all.
Chhaya’s journey began with a pilot program in 2021. The initial offering was a micro health insurance package priced at 365 taka per year—roughly one taka (1 cent) a day. Mr. Shahriar explained, "We launched a pilot program in 2021, offering a basic package for 365 taka a year—roughly one taka a day. This initial offering, a combination of health and life insurance, targeted a broad customer base."
While the response was good, the Chhaya team quickly realized that even this modest annual premium was a barrier for some users. Customer feedback revealed a preference for smaller, monthly payments over lump-sum annual premiums. This insight led to a pivotal innovation: a partnership with bKash, Bangladesh’s leading mobile financial service, to offer monthly and yearly auto-renewal subscription plans. Mr. Shahriar shared, "Customers preferred to make monthly payments rather than a lump sum. This led Chhaya to innovate by partnering with bKash to offer monthly and yearly auto-renewal subscription-based plans starting in December 2023."
This pivot to a subscription model was transformative. By partnering with bKash, Chhaya made payments more convenient and accessible, significantly boosting enrollment and revenue. The auto-renewal feature also provided a stable revenue stream, even during challenging economic and political periods.
Chhaya’s story offers a fascinating case study in identifying critical market needs, developing a unique business model, and executing with resilience. The company leverages technology, strategic partnerships, and a customer-centric approach to address a critical market inefficiency: the lack of affordable and accessible insurance for the masses.
From the beginning, instead of becoming a full-fledged insurance provider, Chhaya positioned itself as an end-to-end digital platform that aggregates and customizes insurance products, providing paperless enrollment and claim settlement.
This approach allows Chhaya to focus on product development, technology, and customer acquisition while sourcing underwriting to established insurance companies. Here’s how it works:
Partnerships with Underwriters: Chhaya collaborates with insurance companies to handle underwriting, enabling it to offer tailored solutions under its own brand.
Customized Products: Chhaya creates bespoke insurance products in collaboration with its underwriting partners, differentiating itself from pure aggregators.
Embedded Insurance: By integrating insurance into other services—such as microloans and remittance programs—Chhaya reduces acquisition costs and expands its reach.
Tech-Driven Operations: A fully digital platform streamlines enrollment, claims processing, and customer service, making insurance more convenient and accessible.
This model emphasizes customer relationships, modularizing the value chain, and reducing distribution costs. Chhaya’s platform establishes a direct relationship with users, modularizes the insurance value chain, and leverages embedded insurance to achieve near-zero marginal costs of distribution.
While Chhaya began with a focus on health insurance, the founders soon recognized that the lack of coverage extended far beyond healthcare. Roadside vendors, for instance, whose livelihoods depend on small inventories of merchandise, often have no fire or property insurance. Similarly, expatriate Bangladeshis working abroad and their families back home are frequently left unprotected.
This realization prompted Chhaya to expand its offerings into life and property microinsurance. Mr. Shahriar explained, "We identified that the lack of insurance extended to life and property as well, especially among the underserved populations. This led to a strategic decision to expand its offerings beyond health, venturing into life and property microinsurance."
This expansion was achieved through strategic partnerships. By embedding insurance products within other services—such as microcredit loans and remittance programs—Chhaya was able to reach underserved populations more effectively. For example, microinsurance bundled with microloans provides borrowers with financial security in case of death or disability, while partnerships with expat-focused companies offer coverage to families of overseas workers.
Chhaya’s business model is built on three pillars: strategic partnerships, technology-driven operations, and customer-centric product design.
As we mentioned above, Chhaya collaborates with established insurance companies for underwriting, allowing it to focus on product development, technology, and customer acquisition. This partnership model reduces capital requirements and enables Chhaya to offer tailored solutions under its own brand.
By embedding insurance into other services—such as microloans, remittance programs, and hospital networks—Chhaya minimizes distribution costs and reaches customers more efficiently. This embedded approach has been key to scaling its operations.
Finally, Chhaya’s fully digital platform streamlines enrollment, claims processing, and customer service. The use of auto-renewal subscriptions via bKash ensures convenience for customers, while partnerships with over 150 hospitals provide additional value through discounts on healthcare bills. This model allows Chhaya to scale efficiently while maintaining positive unit economics.
Chhaya’s current product lineup includes five subscription-based packages, ranging from 50 to 900 taka per month (which is roughly 50 cents to 9 dollars per month). These plans offer varying levels of coverage, from basic hospitalization and accidental death benefits to comprehensive packages that include outpatient services, critical illness coverage, and diagnostic tests.
For instance, the highest-tier plan provides up to 1 lakh taka in hospital bill coverage, along with benefits for doctor consultations, medication, and diagnostic tests. The total annual coverage combined together for this highest-tier plan is taka 9 lacs, which is roughly USD 9,000. This tiered approach ensures that customers can choose a plan that fits their budget and needs.
As of 2024, Chhaya has made significant strides in scaling its operations and expanding its user base. Here’s a snapshot of the company’s current status:
User Base: Chhaya has enrolled tens of thousands of customers, with a significant portion coming from its B2C channel and embedded insurance partnerships. The company’s subscription model has been a key driver of customer acquisition and retention.
Revenue Growth: Chhaya has achieved a 28% month-on-month revenue growth in 2024, with monthly revenue increasing tenfold since the introduction of its subscription model in December 2023.
Partnerships: Chhaya has partnered with over 150 hospitals, enabling customers to save up to 40% on healthcare bills. The company also collaborates with microfinance institutions, remittance services, and other organizations to offer embedded insurance solutions.
Technology: Chhaya’s fully digital platform ensures a seamless customer experience, from enrollment to claims processing. The company’s tech-driven approach has been instrumental in reducing operational costs and improving efficiency.
Team and Operations: Chhaya operates with a lean team, leveraging the personal networks of the founders and strategic partnerships to maximize output. The company’s focus on resilience and adaptability has been key to its success in navigating challenges like the COVID-19 pandemic and political uncertainties.
Chhaya’s journey has not been without challenges. Launching a startup during a global pandemic presented unique challenges, from navigating lockdowns to addressing customer skepticism about insurance. However, the team’s resilience and adaptability have been instrumental in overcoming these obstacles.
A key turning point was the introduction of the auto-renewal subscription model, which provided a stable revenue stream and improved customer retention. By focusing on minimizing costs, optimizing operations, and leveraging the personal networks of the founders, Chhaya has achieved a 28% month-on-month revenue growth in 2024 and a 10-fold increase in monthly revenue within a year of launching its subscription model.
Chhaya has so far made significant progress and received several meaningful recognitions for its work, including winning the GITEX Asia Award in Dubai in 2024, being selected for the Accelerating Asia cohort 10, securing an insure-tech license from the Bangladesh Insurance Development Regulatory Authority (IDRA), and participating in the Stanford SeedSpark program and winning the SimCubator 2023 program.
Looking ahead, Chhaya aims to expand its reach by forming more partnerships and introducing additional embedded insurance solutions. The company also plans to develop its tech platform further to streamline claims processing and enhance customer experience.
One of Chhaya’s most ambitious goals is to extend insurance coverage to the approximately 15 million Bangladeshis living abroad and their families back home. Mr. Shahriar says, "One of our major goals is to extend insurance coverage to the approximately 15 million Bangladeshis living abroad and their families in Bangladesh. We also intend to create innovative products for the 8 million small businesses in the country."
Chhaya is hardly a typical insurance provider; it is a vehicle for financial inclusion and social impact. By offering affordable microinsurance, simplifying policy terms, and leveraging digital payment systems, Chhaya is making insurance accessible to those who need it most.
The company’s vision is to become the leading microinsurance provider in Bangladesh, not just in health but also in life and property. With an estimated insurance gap of $15 billion, Chhaya’s innovative approach and strategic partnerships position it to make a significant dent in this unmet need.
