‘Though being one of the strongest tools for nation building and a main fabric of society, Indian insurance is not going the right way

Yashish Dahiya, the CEO and co-founder at PolicyBazaar.com, the largest online insurance aggregator in the country, is a man with a mission – he is out to revolutionize the Indian insurance business in his own way by bringing in more transparency. A firm believer in technology, he asserts that his online business can almost do away with the human interface. He is worried about the insurance sector as it is today and feels that, though being one of the strongest tools for nation building and a main fabric of society, it is not going the right way. He strongly condemns the human desire to mislead and misguide and stray away from focusing on social objectives which are essential to the insurance business.

Being an expert in this field, Dahiya has led the business of PolicyBazaar.com with great foresight and expertise and is one of the pillars of success for the brand. Before starting his entrepreneurial journey with PolicyBazaaar.com, he worked with First Europa, a global online insurance broker, as their CEO and has also had the experience of working with an online travel aggregator, ebookers.com, a leading pan-European online travel agency as the managing director.

Dataquest spoke to him at length on PolicyBazaar’s online business, its expansion plans and the various challenges facing it. Excerpts

On doing away with the human interface…
I am a believer that something which is electronically recorded or recorded is more reliable than a human being – advice has many layers and the interpretation is open but not the difference; the main problem is the consumer is less aware and the insurance agent is also less aware, especially in India. Agents tend to try and dissuade customers from going online; the ability to misguide somebody is phenomenal.

In fact, I would go to the extreme of not allowing consumers meet the agent, because they misinterpret products. Lot of data since last year shows that claim settlement is the highest online and the level of declaration is also the highest. Term insurance is the best product in the market and we have learnt this since last year, and there is no other way you could buy cheaper insurance than online.

I would go directly on investment, I would rather avoid agents because they complicate products; and there is so much fine print out there. If you ask me, actually 95% could not know what or how of insurance, it takes years and years to understand products. Because nobody (agent) talks about the product, everyone talks about what they should get. That has been the very traditional approach in insurance. Now, it’s very simple, if you can break it down and as long as you can keep the data and steps simple.

On the current business…
Today, after 4 years of establishment, we have an employee strength of approximately 1,200, who directly or in-directly engage with the customers and help them choose a financial offering which is best suited to their needs. This faith was also corresponded in a recent survey we had done with TNS India.

Also, today we have over 20 mn unique users visiting Policybazaar.com each year to compare the best suited insurance offering for them and close to 30,000 people every month make their insurance purchase because of inputs received on Policybazaar.com. Pure e-commerce online transactions are above 10,000 per month on insurance making Policybazaar.com the largest online sales platform for insurance in the country, with close to Rs 200 crore of new insurance business premium being accounted for.

Last month, we got close to 2 mn unique visitors, but this traffic goes up by 2.5 times in the last 4 months of the financial year.

What is the profile of your consumer?
The largest number of purchases is in the segment of 25 to 35 years because I think they feel the need of financial planning, their health starts to become more real; the child plan-if they don’t start now, it may be never be. All these things start to become a reality at about 35-40, till then it’s out there but not really a reality. Also we are targeting tier-2 and-3 cities too. We do not target NRIs, however we can give offerings to his family here; and travel insurance to Indian professionals traveling abroad.

On the challenges his business faces…

There are 3 main challenges in our business:

#1 Lack on online distribution and pricing system for insurance. In the absence of the same we had to physically build online bridges with each company for every product to make it available online for customers
#2 Regulatory atmosphere which makes the business model very uncertain
#3 Very small portion of the market and product base being online today, only 70 products can be bought online

But these challenges provided a huge potential at 10,000 policies being sold online through us already. In my opinion in the next 3 years close to 50% of the market will move online and e-commerce players like us will benefit a great deal.

On competition…
Our current market share versus competition – 60% of all online insurance sales takes place on PolicyBazaar. We control more than 97% market share vs our competitors.

On the use of technology in the business…
We have spent about Rs 8.5-10 crore on building the platform, customization, database management, high flyer integration etc. We are already doing back-end database management on remote servers; most of us operate on the cloud. We have about 95 in-house engineers developing the GDS software for managing insurance online, similar to the one in travel business; we have already sold the product to 8 companies.

On future plans…
Going forward, we are hiring 500 employees in the next 2 months; the company is growing 100% y-o-y basis. Net revenue for current financial year was Rs 25 crore and target net revenue is Rs 50 crore for the next financial year. Investment plans over next 5 years – we are targeting Rs 200 crore revenue in the next 3 years and expansion plans over next 5 years – 3 lakh monthly online sales of insurance.

On the government allowing FDI in multi-brand retail…

E-commerce is a great way to get products to remote customers:

  • As well as help customers find difficult products (Asics Shoes, Speedo Goggles, term policies)
  • Help get global understanding and experience to run business

Retail businesses need a lot of cash to run. FDI investment in retail will greatly benefit the industry and help boost consumer and supplier confidence and help bring in much needed cash flows in these businesses. Retail businesses face large issues in supply chain management and logistics and other practices, which help them, run business better. FDI in investment will not only help get cash flows, but also bring along global business learning, along with better workflow and operations management, which in-turn helps business greatly.

E-retailers or ecommerce websites help the product directly reach the consumers and help reduce the distribution gap. Consumers get a direct benefit of convenience, wider choices of products coupled with lower costs. Suppliers and product manufacturers benefit from large case players who can help build sales volume and efficient distribution formats.

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