For Indian e-commerce giant Flipkart, foraying into the insurance scene was an eye opener of sorts.
The ‘Complete Mobile Protection Programme’ that it launched in collaboration with local insurance major Bajaj Allianz General Insurance covered all leading mobile phone brands sold on its platform. The programme proved that Indian users have begun to look beyond traditional insurances like life and health and are eager to have their lifestyle and wellness products to be protected as well.
According to IDC, Flipkart’s share of online phone sales is currently about 65%.
Ravi Garikipati, senior vice president and head of fintech, Flipkart said, “In line with our customer-first policy and as the market leader in this segment (online phone sales), insurance felt like the logical next step in providing consumers with excellent after-sales care for their phones.”
Estimates suggest about 36% of mobile phone users in India own smartphones. Despite the pervading fear of having their screens damaged or their phones stolen, the warranties offered by manufacturers is their only bastion of hope. There is hardly any microinsurance offering for customers. Most don’t even know where to begin looking for one.
While insurance policies look the same as they always have, old-school terms and sales methods no longer fit this segment. Policybazaar.com co-founder and CEO Yashish Dahiya agrees on the same.
"Insurance has been a traditional industry and from that perspective, there is a lot of scope to change, both in terms of the product as well as the processes," Dahiya says.
Industry experts say that customers are wary of trusting insurance agents because they are never sure whose interests they represent. The terminology used by insurance companies seems to be purposely dense which further puts off customers.
Tech startups in India seem to have their ears tuned in to these woes. Startups competing with incumbents are building better interfaces to sell understandable policies via smartphones and desktops. And investors are opening up their funding arms for such startups.
According to data from research firm Tracxn, insurance-focused startups have so far this year raised more than USD 289.60 million in venture funding, mostly from VCs as well as large funding conglomerates.
The sector has also attracted a further 48% extra investments worth USD 289.60 million by October 2018, as compared to USD 196 million in 2017. In 2016, the insurance tech startups raised a total of USD 21.18 million only. This makes it clear that investors are opening up for insurance-focused tech startups.
The lion’s share of investment has gone to companies pioneering and popularising coverage categories and delivery models, with a particular focus on millennial customers.
Policybazaar is one of the most richly funded players in insurtech space, which raised USD 200 in June in its Series F round led by SoftBank Vision Fund, with participation from existing investors including InfoEdge.
Policybazaar.com is the flagship brand of Policybazaar.com Group of Companies, that owns fintech brand Paisabazaar.com, healthtech venture docprime.com, and lending & insurance marketplace in UAE region Policybazaar.ae. From receiving traffic of 1,80,000 visitors in 2008, Policybazaar.com today hosts over 100 million visitors yearly and records sales of nearly 300,000 transactions a month.
Currently, Policybazaar.com accounts for nearly 25% of India’s life cover, and over 7% of India’s retail health insurance. It accounts for roughly half of all internet-based insurance purchases in the country and is more than doubling annually. PolicyBazaar believes this will enable it to grow at a CAGR of over 80% over the next three years achieving 10 million transacting customers by 2020.
While earlier policies were either life insurance, or health insurance, the millennial tech startups are offering insurance policies with an absolutely new recipe.
As per the Boston Consulting Group (BCG) estimates, digital influence on insurance purchases will grow to 50% for life insurance and 75% for general insurance, worth about Rs 1,20,000 crore of new insurance premiums by 2020.
For instance, Gurugram-based Toffee insurance sells bite-sized insurance for everyday needs such as wellness insurance called StayFit Toffee, Anti-Dengue Toffee, Globetrotter Toffee, Renter Toffee, Commuter Toffee, Backpacker Toffee. The prime focus of the firm are Generation Y consumers.
Toffee CEO and co-founder Rohan Kumar told The Passage that insurance has been too complicated and expensive for too long. So in 2017, he and Nishant Jain created Toffee Insurance to make the process “simple and sweet.”
Toffee Insurance is an all-digital insurtech company, seed funded USD 1.5 million by Kalaari Capital, Omidyar Network and Accion Venture Labs.
“Purchasing a policy from Toffee on average takes 90 seconds and claims are processed within two hours,” said Rohan Kumar.
He claims that the startup is witnessing 100% month-on-month growth since its launch.
Similarly, New Delhi-based Acko’s General Insurance, a new-age online insurance policy provider with its entire operations offered through the digital platform. Founded in 2016 by Varun Dua, Acko provided innovative products with personalised pricing based on customer behaviour and data analytics.
Acko has raised a total of USD 42 million till date, and is backed by Amazon, Narayan Murthy’s Catamaran Ventures, Accel and SAIF Partners, Infosys co-founder Kris Gopalakrishnan, Blacrock DSP Hemendra Kothari, Hexaware Technologies founder and chairman Atul Nishar, Rajeev Gupta, veteran investment banker and founder of Arpwood Capital Venk Krishnan and Subba Rao of NuVentures, Swiss Re & Transamerica Ventures.
Most recently, Acko General Insurance announced a strategic partnership with DriveU, an on-demand driver service to launch an insurance product called DriveU Secure, a trip cover for car owners who hire on-demand drivers on the DriveU platform to drive them to their destination.
The insurance product covers local travel such as commute to work and back, shopping, running errands, being driven after parties, clubs and bars, airport travel, etc. as well as outstation rides, both one way and return travel.
The unique proposition includes cover for any damage to the vehicle during the ride up to a limit of Rs. 10,000 or 20,000 depending on the value of the car. It further offers an insurance cover towards medical expenses, medical evacuation and hospital stay in case of injury to the passengers and the driver. This insurance can only be purchased from the DriveU app at the time of making a booking. The coverage period begins at the start of the ride and lasts until the end of the ride.
“Acko plans to continue introducing such innovative products which ensure that consumers secure different aspects of their daily activities in an easy, frictionless and seamless manner. Our partnership with DriveU is just another example of integrating insurance into the daily lives of consumers,” explained Kulin Shah, vice president partnerships at Acko.
Acko’s founder and CEO Varun Dua said that the company wishes to rebuild insurance around what makes sense to consumers.
“Our game plan is to unbundle insurance in India to make it both more affordable and relevant to consumers.”
Digit Insurance, another new age insurance platform, started operation in December 2017 and has bagged investments of USD 94 million till now over two rounds.
Speaking about its offerings, Vivek Chaturvedi, the company’s head of marketing said when the initial team of Digit came together, the one thing that bothered the team was the level of mistrust for insurance among people.
“This insight led us to Digit’s mission to make insurance simple,” he said.
Explaining how Digit has simplified insurance, he said that the company offers products that the team would create for themselves and their families. For instance, the company’s products cover flight delays starting from 75 minutes to loss of baggage, worldwide cover & no depreciation in jewellery products.
The company also offers a self-inspection process for cars, allowing owners to capture the damages to their vehicles through a simple app, which does away the need for a physical inspector to check them.
In nine months, the company claims to have generated a revenue of over Rs 200 crore.
“In June, we did Rs 43 crore in retail premium and Rs 50 crore in July this year. We started operations in December 2017. In 7 months, we had crossed 0.5 million happy customers and had settled 5000+ claims,” told Chaturvedi.
Last month, Policybazaar too launched a new version of self-video cashless claims feature on its app for easy and faster claims processing & settlement. The new feature allows consumers to overcome the hassle of physical inspection for claims and allows them to self-upload a video through the app for evaluation of damages on a vehicle, making the entire inspection process a matter of minutes and the approval process a matter of few hours.
With the human element of in-person inspection done away with and process largely automated, it significantly improves on the efficiency of the process, with the intent being to improve the overall consumer experience around the settlement of claims, a pain point for the industry in the past.
Speaking about how the newly launched feature, Yashish Dahiya said that the app is expected to reduce the timeline of approval/non-repair timelines from two days to two hours.”
Apart from Flipkart, other unicorns across sectors too are betting on it. Paytm, which began operations in 2010 as a digital wallet service, has now diversified into financial services and is looking strongly to cash in on insurance premiums.
In February, Paytm registered two insurance entities, Paytm Life Insurance Ltd and Paytm General Insurance Ltd with the Registrar of Companies (RoC). The paid-up capital in both these entities is around Rs 10 lakh each.
In September, media reports revealed that Amazon India in its filings with the ministry of corporate affairs revealed that it intends to enter India’s rapidly growing insurance industry. Amazon India is soon expected to offer life, health, and general insurance products as a corporate agent, as the company is yet to seek an approval from the Insurance Regulatory and Development Authority (IRDA).
Where does insurance+tech stand at present?
“It is just the beginning of disruption in this sector. Agents visiting houses to sell an insurance policy will just become history very soon,” predicted Policybazaar’s Dahiya.
Digit Insurance’s Chaturvedi said that insurance is an industry ripe for digital revolution and India has a market has a large population of smartphone and internet users which makes it an important market.
“With the ease and habit of digital processes, the consumer is turning towards digitally-imagined players even in the insurance space which again increases the opportunity of digital-first insurance players. And given that insurance is an under-penetrated category, innovation in products & processes and greater reach through digital, increases the potential further,” he said.
He also added that the industry will see disruptions across aspects and this won’t just come from the new companies but also from the traditional players.
Interestingly, traditional players have begun to compete with new age startups. For instance, HDFC ERGO has launched ‘E@Secure’, a Cyber Insurance Policy for individuals. This policy aims at providing comprehensive protection to individuals and their families against any cyber-attacks, cyber frauds or digital threats that could lead to a financial loss and or reputational loss.
Various cyber risks such as unauthorized online transactions, phishing and email spoofing, e-extortion, identity theft, damage to e-reputation & cyber-bullying are covered in the policy. In addition, the policy pays for legal cost and expenses and legal advice sought by the insured in case of a legal dispute arising out of specified risks covered in the policy.
Commenting on the launch of the new product, Ritesh Kumar, MD and CEO, HDFC ERGO General Insurance Company said, “We live in a digital world, where individuals freely share a lot of their personal as well as financial information online. We believe in the times to come that E@Secure will become a part of our life and everyone who uses social media, net banking or surfs the internet will need this product to cover their cyber exposures. This is a latent demand in the internet usage community which we are trying to address through this product.”
Toffee Insurance’s Rohan Kumar, CEO and co-founder affirmed that India has taken giant leaps into the digital world.
“In 2016, 10% of online users were using online banking and this number is expected to reach 32% by 2020. Given the Indian population, this is a mass demography— a demography that is rapidly coming online and into financial services, yet has less than single digit insurance coverage,” he added.
Other startups in this space are like GramCover, the insurance marketplace for rural India, Ronnie Screwvala-backed Easy Policy, Mumbai-based TurtleMint, Gurugram-based Renew Buy, and Kolkata-based Gibl.in