In a free-flowing conversation from Dubai, Dahiya, who helms the Gurugram-based company that runs insurance marketplace Policybazaar and credit marketplace Paisabazaar, pointed out that those wishing to invest in the insurance space should put their money onpeople who have shown some returns already.
Most of the disruption in the insurtech space is taking place in distribution, which is just a $250 million revenue opportunity, he noted.
While admitting that there is a viable business to be set up in digitising the physical agent network, Dahiya said there is definitely a bubble building up in the insurtech space with respect to sky high valuations.
“You have to always pass on 95% of what you earn to these agents and on top of that it is a ‘buy’ market with almost no loyalty,” he said.
Policybazaar itself is pushing into the physical distribution space with the PoSP (point of sales person)business, but Dahiya wants to grow slowly, keep costs under check and wait forthe competition to burn out.
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On technology in insuranceDahiya pointed out that technology is one way to reduce costs, and that embedded insurance is an even more efficient route. Without data analytics and tech, the long term growth and viability of the insurance industry will be under question, he said, adding that the regulator (Insurance Regulatory and Development Authority of India) is also moving in that direction.
Though 95% of insurance in India is still sold offline, if one takes a 20-year view, then data and tech is the future, he added.
Super apps getting into insurance
Players like PhonePe entered into insurance after tasting success in payments. Amazon became an insurance distributor after grabbing market share in ecommerce and payments. While he did not single out any company, but Dahiya said that the real margins are in credit.
Also, it is tougher to sell health insurance vis a vis a credit card or a personal loan. So startups will do better by going after credit rather than chasing insurance. Insurance is a misunderstood market and people like to hear what they do not understand, he said.
“People are wasting time trying to do insurance,” he added.
Insurance penetration
While the insurance industry talks about a 5% penetration, Dahiya has a contrarian view. The industry should focus on pushing health and term insurance penetration which isan even smaller fraction of this 5%, he said.
Given 75% of the insurance market is actually selling savings products, Dahiya feels the focus should instead be on the ‘protection gap’ in the market. Globally, ‘protection gap’ is defined as the amount of insurance that is economically beneficial for the country compared to the amount of insurance that is actually purchased.
According to Dahiya, rather than focusing on the insurance penetration number, the industry should look to plug the protection gap in the economy.“In the last 10 to 15 years, our sum assured would have more than quadrupled,” he said.
Growing costs of treatment
Even though India is a country with a very low price of insurance, Indians do not buy protective cover, as they believe the family will bail them out in a health emergency. But Dahiya believes with more and more people living in nuclear families, there will hardly be anyone to help during a crisis.
Even corporate insurance cover will not be enough in case someone develops a chronic illness, he pointed out. In 80% of those cases, the person ends up losing the job and the protection, he said.
He feels the industry and media needs to do more to showcase real-life case studies to enforce the habit of buying insurance among Indians. While the sector regulator has taken great efforts to ensure lifelong renewability of health policy in India, Dahiya feels Indians should take advantage of such benefits and spend on buying health cover for themselves.
Massive marketing spends
Policybazaar has spent around Rs 2,500 crore since inception to promote health and term insurance, Dahiya said. Even now, it is spending around Rs 300 to Rs 400 crore on campaigns every year, he added.
The industry can do something by pooling its resources together like what AMFI (Association of Mutual Funds in India) has done for the mutual fund space, but he does not want to wait for that. Dahiya is doing around 100 advertising campaigns every year to push health and term cover to consumers.
Bima Sugam and the future of insurance
Dahiya is hopeful that an initiative like online insurance marketplace Bima Sugam will help companies get better access to data, prevent fraud and also create stronger underwriting systems. As an industry, insurance does not talk of underwriting enough and focuses more on sales and marketing. If Bima Sugam becomes the pool for data, that will be a great thing to happen to this space, he said.
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