Online financial services platform Policy Bazaar gained the much-coveted unicorn status last year when it announced raising USD 236 million in a round led by SoftBank Group. Last month, EtechAces, the parent of Policy Bazaar, secured the first tranche of USD 152.11 million as part of the Series F round.
Started in 2008 by Yashish Dahiya, Avaneesh Nirjar and Alok Bansal, Policy Bazaar plans to go beyond selling different insurance products plans. It launched an online consultation platform DocPrime in June last year, getting into a space that is already crowded.
Avanish Tiwary spoke to Alok Bansal about the digital insurance sector and his company’s growth.
The Passage: What challenges did you face on your way to becoming a unicorn?
Alok Bansal: None of the founding team members came from an insurance background. We came from the consumer internet space. We understood the business side and its management, but the specific product or industry knowledge was missing, allowing us to ask some stupid questions when we began. Our business changed a couple of times in terms of the focus area. Until we built integration and knowledge, we survived with lead generation. Over time we started shifting to transactions. Overall, I think it was the right time from a market perspective, but much tougher because consumers and others in the industry were not ready.
The Passage: Why do you say the industry was not ready?
Alok Bansal: So if I have to do IP integration with an insurance company to begin the on-boarding process, it needed to be done manually after taking details from the agent. Customers at that time could not go to the website and buy policies. Insurance companies could not give me API (application programming interface) to integrate. The industry was not sure customers could directly come and buy, so they had not structured their IT system and processes around that.
The Passage: What do you think prompted SoftBank to take a bet on you?
Alok Bansal: They could clearly see that we stood out in this particular domain. Anyone looking into financial services in India would first think of Policy and Paisa Bazaar. We were scaling very fast. The second thing investors would like to see is the founding team. We have been around for 11 years now and we were able to successfully pivot a couple of times. They also like our relationship with partners, customers, bankers, etc. All this sealed the deal.
They were looking for an opportunity to invest in this space and we started engaging with them 18 months ago.
The Passage: How do you differentiate yourself from other players?
Alok Bansal: We have a platform which enables customers to buy all sorts of insurance products as per their requirements, speed and convenience. We try to control the experience end-to-end of the value chain. We work with partners to create customer-centric products and use a lot of data to remove friction from the buying process. The basic difference that we are trying to drive is to move the industry to be more focused on individual customers, rather than just distributors. India and China are a bit similar here. A lot of social dynamics used to be on the family, but over time you saw the migration from rural to semi-urban, and from joint family to a nuclear family setup. Which means individuals will have to start planning very early on the financial side.
In India, we somehow started at the right time. It requires some education on the customer’s side and maybe some sort of a trigger, because of which they may start thinking that they need to have a particular product in their portfolio.
The Passage: Do you think you still need to educate people about digital insurance?
Alok Bansal: Insurance is a very broad category. People have been buying for many years so they understand what they are buying. You don't need to hand hold or educate too much. Yes, there can be some tweaks in the product over time, but it is not a big risk that is being covered usually.
On the other hand, most companies in India have traditionally focused on investment products, and they don’t create these products with a focus on customers.
The biggest difference between offline and online is that offline is a push channel, while online is a pull channel. Technology is playing a big part, such that offline will just not be able to compete. Things are taken care of in the online channel, but online also provides you with the ability to use a lot of data and tech to improve not only the product bouquet but also the experience of buying. It enables us to improve the product.
The Passage: How is your company growing?
Alok Bansal: We have been growing at 80-100% in the last five years. The focus is on scale and growth, but without losing too much money.
We have always been able to cover our direct cost. We want to keep investing on technology and marketing. We have also tried different business models apart from Policy Bazaar.
Paisa Bazaar being the prime example, which started five to seven years ago. It's a platform for credit and investments — non-insurance products for the same retail customers. We are the largest in India now. It has grown faster than Policy Bazaar because of the small base.
We are experimenting too. The major one being an attempt to disrupt the healthcare side with a product called DocPrime. It’s still in the early days and we want to see how this pans out. It’s not even been a year since we started.
The Passage: Can you explain how DocPrime works?
Alok Bansal: With DocPrime, customers can come and chat with a doctor, get a prescription. We help them connect to a physical doctor or a lab or a pharmacy as required. We can also connect them to hospitals for critical procedures. DocPrime is very closely aligned with both Policy Bazaar and Paisa Bazaar. If you need a loan, then we can connect you to a partner. But as I said, it’s early days.
The Passage: Is DocPrime similar to the Chinese product Pingan Doctor?
Alok Bansal: DocPrime is inspired from Pingan Doctor and we have added things on our own for a better experience for customers. DocPrime will have a connection with the hospitals and clinics where the same health insurance customer will go for a claim. So it’s got multiple angles to it.
Pingan Doctor is mostly about consultations and a lot of it is enabled by AI. In our case, consultation is just the starting point to give a better healthcare experience to customers.
The Passage: Policy Bazaar and Zhoangan Insurance also look similar.
Alok Bansal: Zhoangan typically has products that are suited for their partners such as Tencent and Alibaba, who are their investors. Their products are suited for customers who shop on Alibaba or Tencent’s portfolio companies. Suppose you are buying flight tickets on C-trip, you will get a product which is related to cancellation or delay of flights.
We are an insurance company and we sell core products. Zhoangan is very different from us.
The Passage: Do you also plan to get into bite-size insurance?
Alok Bansal: Unless customers really know what they're buying, I don't think it’s the right product. If you are getting a product as an attachment, and you don't even know you have bought this product and you never going to claim anything out of it, then definitely you don't have a business.
You're just trying to sell the customer something in some form. My belief is a good product should have a claim ratio of 60-70%. If the claim is really low feel, then it's not the right fit for the customers.
If a partner wants us to create a specific product for a region, we can explore.
The Passage: Apart from the protection, how is the asset side of the business?
Alok Bansal: We are the biggest in assets. In India very few people prefer home insurance. People do, however, buy two-wheeler insurance. The number of transactions are huge but the ticket size is very small. With the government coming up with three-year and five-year policies, I'm not sure how it's going to pan out. Let's see how that develops over the next few years.
The Passage: You have also launched mutual funds on Paisa Bazaar.
Alok Bansal: It’s in the early stage. We have some traction, but we want to wait for a year before saying anything specific on that. This business will require a lot of upfront investment in terms of validating the model itself. We are still at that stage where we are saying that we will prove certain things in the next six months. If the matrices are right, then we will develop in terms of scaling. Right now our focus is to keep it small and prove that it can work.
The Passage: Is there a revenue model?
Alok Bansal: That’s what I said, it's a very small revenue. In investment as a category, most people are banking on the possibility of a cross-sell at some point of time, which may or may not happen. That’s why I said we are keeping it small trying to prove the dynamics.
The Passage: But you have the advantage of cross-selling, so why not go big in the beginning?
Alok Bansal: Yes, we have that advantage, but customers must be ready to buy another product when they're buying mutual funds. No one has the kind of scale and no one will be making money out of it for a very long time. Right now it’s very tough to generate revenue from this. We will try for six months and see if we want to continue.
The Passage: What is the focus for you this year?
Alok Bansal: From our perspective, most of the businesses have their business heads. So we will continue to push for a couple of more experiments in terms of new business lines. Our focus is to create differentiation from not just the offline channel, but also the online guys.
The Passage: Do you also plan to raise money to get into new businesses?
Alok Bansal: We have more than enough capital for now. We don’t like to burn too much money. Even when we do experiment with new lines of business, we don’t like to burn money.
The Passage: But you spend a lot on advertising.
Alok Bansal: Yes, but we do a lot of this in-house. It has to be a direct and simple communication — that this product is something you need to have in your financial portfolio and it would be stupid not to think about it.
The Passage: How did you reach where you are now?
Alok Bansal: In a nutshell, it’s all about execution, and for that you need a good team. Over time, we might list a few valuable focus areas because of external factors. These could be the investor community, media, or anyone. But we need to be very clear what we're trying to build.
We have also been actively trying to let everyone take their own decisions in their areas and not come back to us. That not only empowers them, but gives them a sense of belonging.
The Passage: In the insurance space, what could be the learnings from China?
Alok Bansal: I don't understand China very well, but China has scaled-up businesses, full finance services. Whether it is a semi-lending or payment ecosystem, or even the digital insurance side.
The sort of scale that China is able to get and the way they are able to control the whole experience for customers is something which needs to be applauded.
How these companies broke out from the competition, scaled and got in alignment with everyone in the ecosystem is something, I think, Indian companies could learn from.