Exclusive | We're growing 100% every year, PolicyBazaar's Kukreja
The online insurance market has been witnessing steady growth in India on account of increase in demand for life insurance and non-life insurance products. This surge in demand can be attributed to many factors including higher internet penetration, emergence of web aggregators and customer awareness.
According to a recent study, the online insurance market reportedly stood at Rs 700 crore and this number is expected to grow four-fold within the next three-four years. Insurance comparison portal, policybazaar.com has played a key role in expanding this market. Since its launch in 2008, the company has come a long way to become the destination site for online insurance in India. We caught up with Naveen Kukreja, Chief Marketing Officer, Policybazaar.com and Director, Paisabazaar.com to discuss about the journey of the company and the future trends he sees the industry will witness.
Industry at a glance
According to Kukreja, life insurance has been one segment that has been plagued with mis-selling. “Most plans that get pushed by agents in the traditional set-up are based on commissions that benefit either the insurance company or the agent. Once sold, such policies have higher chances of lapsing.” As per the recent finding, about 35% customers surrender their policy by the end of second year. At the end of four years, only 25% of existing customers renew their policy and the remaining 75% opt in favor of discontinuing it.
Out of 100 insurance policies sold in the country, only 3-4 are sold online. As far as insurance comparison portals are concerned, about 95% of the policies that are sold online are from Policybazaar. “In terms of figures, we sell about 35,000 online policies per month. We have grown 100% last year and we hope to further expand our business operations. The intent is to have a 10-fold growth in the next 3-4 years, so we should ideally sell about 3.5lac policies each year.”
Speaking about lack of awareness, Naveen added, “Some consumers don’t even know that porting a policy is very easy. In fact, you can get the policy in just one minute on your email when you buy it online. As this awareness increases, more people will buy insurance through online medium. In advanced markets like UK, 65-70% of all insurance policies are bought online. In India, we see the shift happening in next 2-3 years. The online insurance indeed, remains a challenge. It is not easy to change the consumer’s mindset. It is a long term plan. While Policybazaar plans to invest in brand campaigns to increase awareness, it will also focus on enhancing the consumer experience for online insurance purchase.
Online is a cost-effective medium. The cost of selling insurance online is lower owing to minimal distribution cost involved. “Our cost of distribution has come down to Rs 1,500 per customer and we are working towards bringing it down to Rs 500 per customer.When we reach that stage, we will be able to sell all the policies that are right for our consumers, with minimal distribution margin.”
While increasing digital penetration remains one of the biggest factor in the company’s growth story, there are other contributing factors that cannot be ignored either. The insurance passage bill is one of them. “A higher FDI will result in some positive changes for the industry at-large. As internet penetration increases, more consumers will visit online to compare policies. With smartphones gaining popularity, mobile platform will also help our growth. Insurers launching online low-cost ULIPS will further widen the product bouquet.”
With limited room for its insurance business to maneuver, the company is also looking at selling loans and credit cards through its new venture – Paisabazaar. “Paisabazaar currently offers personal loans, home loans and credit cards. We are planning to add savings accounts, fixed deposits and mutual funds to our existing portfolio of services. In addition to this, we are working towards facilitating buying loans online and are actively tying up with banks for this.”
“Across retail financing, the consumer wants three things - protection (in terms of insurance), credit cards and loans & savings. Going forward, we hope to extend these services to our customers.”
The journey so far has been very exciting and equally challenging for Policybazaar. “The scope to grow and expand our business operations is vast. Earlier this year, we raised series of funding of USD 20 million in order to meet our growing business targets. We plan to raise another round of funding, ranging between USD 50-70 million in near future. This will be utilized to upscale our technology and consumer interface platform. Our core principle remains the same all throughout – offer widest choice, give unbiased advice and help our customers get the right product.” By Archit Ambekar | Twitter: @aambarchit