In a blog post published on November 3, Sen alleged that certain officials at IRDAI had a “disdain” for entrepreneurs who were trying to get into the regulated domain of financial services.
The bureaucratic procedures thrust upon this early-stage startup led the founders of Kenko into a “wild goose chase” which ended in their application for the licence getting rejected, Sen said.
Kenko, founded in 2019, was trying to build a subscription-based health insurance product to protect its users against hospitalisation and outdoor treatment. The company, started by Sen and Dhiraj Goel, both seasoned insurance industry professionals, had raised around $13.7 million from large investors like Peak XV Partners, Orios Venture Partners and Beenext.
ET had reported in July that the company was on the verge of shutting down. In August, Sen told employees in an email that the firm was being dragged to the National Company Law Tribunal by one of its debtors.
Pointing out that the insurance regulator was not very keen to allow venture funded startups to set up insurance companies, Sen said they could have been informed about this in the beginning instead of being asked to make many changes to their corporate structure over multiple chains of communication with the regulator.
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“The process became more than just about fulfilling regulatory requirements. We had to convert our Compulsorily Convertible Preference Shares (CCPS) into equity, which led to a host of complications, including issuing bonus shares and incurring short-term capital gains taxes due to secondary sales,” Sen wrote.While IRDAI chairman Debasish Panda had initially encouraged startups to build insurance companies, he did a complete about-turn later, Sen alleged.
Sen wrote that given the insurance sector was run by individuals with no understanding of modern technology, he felt the sector will never be able to achieve its true potential and would remain a distant cousin to banking, which has advanced through the latest technology adoption.
ET wrote on April 6 about the sector regulator strengthening its scrutiny on venture-funded startups trying to seek an insurance licence.
Multiple industry insiders had said then that the regulator had made it clear to the industry that they are comfortable with startups operating as distributors rather than becoming insurance companies themselves.
