In the last six years, how has the online insurance landscape changed?
Six or seven years ago the online piece was only starting. Not only in insurance but also in finance. Even all the e-commerce framework we are seeing today, was just starting out. The only pieces that were working six to seven years ago were travel and work portals such as naukri.com or makemytrip.com. The whole trend was just starting and financial services usually follows e-commerce. From an insurance perspective, the simpler products was where the industry started first and this was general insurance products. Life insurance started about five years back.
We do around 34,000 monthly transactions, this is across life and general, and we have been growing at over 100 per cent over the last three years or so. We are already planning to hit about 55,000 transactions a month by the time the financial year ends. This is because the peak season for the insurance industry is starting now.
My sense is that if six lakh people are buying policies through our website, the total market would be anywhere between 12 to 15 lakh customers buying online.
In the first one or two years, a lot of the products were just coming up, the processes were getting set. Initially, insurers had their processes mapped for offline business that were coming through brokers or banks while over the last two to three years, insurers have become very focussed on online. They have set their process maps for online as they understand that the consumers who are coming through the online segments are of a different profile. They underwrite differently now as they see different type of users coming in and hence some of that benefit gets passed on, especially in life insurance, to the consumers when they buy online.
What are the key learnings for policybazaar over the last six years from a marketing standpoint?
One of the biggest learnings for the industry, including us, has been that consumers are and have been ready for online products, purchases and processes and it was the manufacturers who were taking time to get ready.
As soon as that started to happen, growth took place. As I mentioned, we have been growing at over a 100 percent while the offline industry has been stagnant.
The growth of e-commerce has definitely helped as it has made people more comfortable transacting online.
The other big learning has been that in the online medium everything has to be completely transparent and has to be consumer friendly and in a language that they can understand. Consumers are becoming more familiar with the processes themselves as they have to go through all the terms and conditions themselves as opposed to the offline business, where essentially the agents were telling them what to do.
Today, consumers are very clear about what they expect and what kind of charges they should be paying.
In the offline channel, the first renewal rate is about 60 to 65 per cent. Why would so many people cancel their policies only after one year when they’ve bought a policy that should last 10 to 15 years?
You have been leaders in the online insurance vertical. Now that there are companies offering similar services to yours, how do you intend on maintaining your status as a leader?
Within insurance, even today, what we consider as the biggest competitor is consumer inertia. There are consumers that take their time, who say, I’ll buy it tomorrow and never really end up making a purchase. Of all the online sales that are happening, within life insurance we are roughly driving around 50 per cent and in general we are driving around 35 per cent. The rest of the online sales are happening through insurers’ websites. That’s because insurers have also started to promote the online medium. From a competition perspective, there really isn’t anyone offering a comparable product at scale. The nearest competitor we have, does less policies in a month, than we do in a week. Having said that, we are building out the online insurance business and keeping customers at the core of our philosophy.
We do two three things, all the time. We work very closely with insurance companies to come out with more consumer friendly products. We work with insurance companies on the basis of the feedback we get from our consumers
On the health insurance side, we are working with a couple of insurers to launch a new super top up which is the best way to enhance your cover if you already have a policy. This product helps you increase your cover at a fraction of the cost.
The second thing we do very actively, is to try and offer solutions to customers instead of a single product. Today we have consumers who have needs across two to three criteria. So we are trying to offer comprehensive solutions as opposed to a single product.
We’ve also launched a comprehensive insurance calculator on our website that takes the consumers details and it advises on what the best insurance policy the user should take across life, health and asset protection.
What is your customer outlook for 2015? Is the e-commerce frenzy going to continue or are we going to see a drop off?
Absolutely not. I think we are just starting out in the insurance and finance segment of e-commerce. Even for other categories, I think it’ll just grow and it’ll become more robust and as more and more products get introduced, the pace of growth will increase.
We’ve been growing at 100 percent for the last three years. We expect that to continue. If could actually become faster depending on how fast the internet is able to penetrate. If you see the numbers the online insurance industry is doing, it’s about 15 lakh. The total number of insurance policies purchased every year is close to 2 crore.
What are the key concerns about the way e-commerce runs in India?
There are a couple of things that happen. One is the infrastructure level, starting with access. Speed of access is also very critical when purchasing online is concerned. So if users have to spend 10 to 15 minutes buying an online insurance policy, that’s not good.
The other thing is, as smartphones become more popular and 3G becomes more economical, we will see more people using the online medium.
The third thing is on the regulation side, where the regulator is trying to figure out how the e-commerce works and devise rules for the medium and players like us. We are regulated by IRDA, like any other insurance provider, however the regulators are still trying to figure things out. We’ve already had two iterations of regulations, the first of which was not very market friendly. The second one has looked at some concerns we’ve had. Going forward, regulators will have to play the role of developers of the market and the online medium as opposed to try and control the medium. At this stage what’s required is more and more people get comfortable with the medium and are able to buy online.
“Aankhen kholo. Compare karo” was the positioning of the last campaign. Will future campaigns follow a similar theme?
We are evolving as a brand ourselves. What we try and do in our communications is try and keep it as close to the proposition we offer the consumer. There are two or three propositions we offer to consumers. One of the propositions is that, this is a place where you can come and compare multiple products. The second is, by virtue of comparison, you can save money at a single place and the third is, we try and explain the value of insurance and the need to have the right amount of cover to our consumers.
The brand advertisements have been about comparing and purchasing at one place. All our communication will be along these lines.
You’ve received a lot of funding. What is your ad spend going to look like for the next year?
Most of the funding that has come in, is going to be spent in two or three key areas. One of which is increasing consumer and brand awareness. Even though we are growing at the rate at which we are, the numbers are still quite small. We want more people to come and see what we have to offer.
The second key area is using the funds to invest in technology. We want to strengthen the consumer offering by using technology to offer better solutions. One example was the calculator that I mentioned. We are also trying to build a service by which consumers can locate the nearest hospitals and service stations with relation to a specific health or auto insurance plan. This will help people be more aware and confident about the products they are buying.
In terms of our brand spends, we are more than doubling our brand commitment and will aggressively continue to invest in building awareness.
Policy Bazaar is advertised as a free service for its users. Is there scope for promoted content on your website?
The way we work is absolutely free to the users. When a customer buys a policy through us, we do earn some revenue through the insurer, which is the cost of marketing. We don’t have paid advertisements because we are not biased towards any particular insurer. We list all the products by all the insurers and let the customers decide.
For someone who operates only in the online space, how do you maintain customer confidence? What steps are you taking to maintain this confidence in the coming year?
We essentially are offering a service to the consumer while the product is offered by the insurer. In the service that we offer we have to always differentiate ourselves. Like I said, this is only place where people can come, compare products and then buy the products all through a single journey without going back. What we are doing besides that in terms of adding differentiation, is adding a capability through which users can not only compare but also provide advisory in terms what is the right product or solution.
Till a certain while back, if insurers wanted to talk to consumers or vice versa we used to transfer leads to the insurer. What that sometimes did was dilute the consumer experience as we had no control over what the companies did with the consumer. We didn’t know how they were speaking with the consumers as opposed to when we speak to consumers in a tightly controlled manner. So we were getting a lot of negative consumer feedback. Today we have stopped that activity completely. Consumer data is not shared and we speak to consumers about only their particular need and if they tell us that they don’t want to be disturbed we can stop communication.
We are working on adding a few more tools to increase this confidence over the next few months.
How do you view millennials? How big of a part will they play in your marketing strategy over the coming year?
The entire insurance industry will continue to see growth over the next year. The majority of the country is under the age of 30 and their insurance needs are just kicking in as they have just started working and they will be working for the next 30 years. They have multiple needs and this is the age they start looking at fulfilling these needs.
Our target population is between 25 and 35 and the chunk of the consumers who buy from us are between 35 and 40. What’s happening today is that the younger generation that is coming in is more internet savy than the older generation. Two to three years from now people will be far more comfortable buying online.
So eight years back where you had no one buying online, today, we are looking at a situation where the default purchasing method will be buying online because of how comfortable they are with mobile and technology. That’s good for us and the online industry in general.
(This article was first published in Campaign India on 14 November)
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