India Web Insurance Aggregator Industry is fairly
concentrated within the top 4 players constituting more than 90% of total space.
While none of the top players is a profit making entity as at FY’2019, we attempt
to cover the roadmap for the aggregators in a highly regularized environment. This
discussion was a part of the interview series “A Roadmap for India Web Aggregator Industry” and revolved
around understanding the insights of the Web
Insurance Aggregators Industry in India.
“The interviewee, Mr. Mahavir Chopra, is working as the Chief Business Officer at Coverfox Insurance
Broking Pvt Ltd.”
Here are some edited excerpts of the interview:
When did you
start working in the insurance aggregator industry and how did you associate
with Coverfox?
I had been a part of the industry since 2005 and had
been actively writing about this industry in newspapers and through my own
blog. In December 2005, I, along with few colleagues, started Insurancemall,
the first ever online comparison platform for insurance products in India. The
venture could not succeed due to lack of regulatory framework on FDI into an
existing insurance intermediary. Secondly, maybe we were too early in the
market – and insurers as well as customers were not ready. Then, in 2014, I happened
to meet Varun Dua the founder of Coverfox when I decided to join hands and work
with Coverfox as a founding member.
How has the
industry changed over your tenure?
Regarding the change in industry over the past five years, Mahavir
told- Like every other industry going digital we
went through the journey of customers researching on our portal and exploring
our advisory services, and finally ending up buying offline. The market has
changed significantly since the advent of ecommerce, smartphone and high-speed
internet in the country. Customer’s trust over the online medium is at an
all-time high. On the other hand, insurers and intermediaries have been making
serious investment into digital play improving the overall sales and post-sales
experience significantly. Besides volumes seeing an upward swing, we also see the
average ticket size improving with our portals that was unheard of a couple of
years ago.
What are the
key dynamics governing the product portfolio of the industry?
Car and bike insurance, being transactional one-year
policies, see the maximum number of transactions on the online medium. Given
the simplicity and standard nature of the product, auto insurance customers
have taken up insurance online well. Online Term is another area where thanks
to zero commission products, the differential pricing draws a lot of interest
from insurance seekers. Given the transactional nature of the product, and the
fact that offline life insurance agents do not market this product
aggressively, Online Term has great potential online. In terms of premium and
revenue, this would be the number one category for most aggregators. Health as
well as Investment products are also seeing above average year on year growth.
What are the
factors restricting growth of the industry to its full potential?
The traffic for online insurance is still limited. There
are too many players chasing too small a traffic resulting in prohibitive cost
of marketing and sales. Various reports suggest that just 2-3% of insurance
seekers who have internet access buy insurance online. While there are
individual efforts made by some players to grow the online traffic, it needs
more people to invest serious money may be collectively so that people are
aware of availability of insurance online. Somewhere I think insurers who have
access to highest capital are stuck in a conflict between investing in online
traffic and developing future business models, versus maintaining and nurturing
existing source of business from offline distribution partners.
Coverfox has
been known for its Omni-channel distribution strategy. How does the Coverdrive
segment complement the business model?
Coverfox has an online broking license and not an
aggregator license; therefore it is not restricted to mere online selling of
products. When IRDA came up with the POS agent model to increase the number of
insurance agents, Coverdrive, a segment focused on building a network of POS
agents, was launched by Coverfox to provide a wide array of products to POS
agents for selling. As of date, Coverdrive has around 60,000 POS agents on the
network which sold more than a million policies in FY’2019.
The stiff
regulations imposed by IRDA in terms of restriction on cross-selling opportunities
detriment the growth of revenue for aggregators. Do you think IRDA should relax
such regulations?
“There are many opportunities available for online
brokers within the boundaries of the set regulations such as B2B sales, increasing
focus on corporations to buy group insurance and others”, said Mr. Chopra while
for the web aggregators. He was of the opinion that relaxation on some
regulations that allow cross sell could definitely help keeping businesses and
the industry profitable, viable.
Peer companies
such as PolicyBazaar have recently expanded to UAE to provide scalability to
their operations. Does Coverfox have any such plan of expanding geographically?
Going global is definitely on the long term to-do
list of the company while for the next couple of years; the company would be
expanding their operations in the Indian market only, with a special focus on
Tier II and Tier III cities. Coverfox considers Technology and the quality of
the users as their biggest asset and looks forward to capitalize on it.
What do you
think about the future outlook of the industry in terms of customer growth and
competition scenario?
The traffic on the platform is increasing at around 20
to 30% Y-o-Y, which maintains the cost of customer acquisition to around USD
65-70 (Source: Ken Research Analysis). If the mentioned restraints to
the growth of industry are taken care of, Mahavir expects the lead conversion
rate to go up to 9-10% of the leads generated, which currently have a
conversion rate of 3-4%. On the contrary, if proper awareness and expanded reach
to Tier II and Tier III cities are not implemented at an industry level,
profitability could decline leading to consolidation or divestures in the next
few years.
“Players in the market should strive for a balance
between seeking more funding and expanding to different regions while
simultaneously keeping the losses under control. In segments of payment
processing, post-payment customer experience, the firms could ensure various
efficiencies in their business model by successfully deploying artificial
intelligence and entering into strategic alliances with technology companies”
said Mahavir, when asked about the probable top priorities of a CFO in today’s
era.
For any queries or feedback, reach out to the author
at lakshay@kenresearch.com
To
Find More Insurance Market Research Reports, refer to this link:-
Ken Research
Ankur Gupta, Head Marketing & Communications
ankur@kenresearch.com
+91-9015378249
