Insurance for the Digital Age

Insurance for the Digital Age

Accel & SAIF-backed Coverfox is making deft moves at keeping its platform digital-ready for the Millennial generation. It’s success strategies? Simplicity of product and platform which result in speedy navigation & transactions, and a paced foray into commercial car insurance for the Ubers & Olas of India.

Can an insurance policy be issued online just as hotel and flight tickets are on MakeMyTrip and similar such websites? This was the premise on which Varun Dua and Devendra Rane built their maiden venture, Coverfox. The company, today, is positioned as an online insurance portal housing 200 employees, 28 car, bike, home, health and travel insurance companies (of the 30 in these categories across India), and recording a turnover of Rs. 100 crore in 2016 (calendar year) on its premium insurance segment alone.

While these numbers seem promising, a chat at length with its co-founder, Dua reveals that the journey was anything but smooth, what with the business being built in a highly regulated industry.

The Early Days

A media & advertising graduate from MICA (Mudra Institute of Communications, Ahmadabad), Dua made an entry into the insurance industry by chance. “This was around 2001, when private players were just beginning to make a foray into India’s insurance industry and I had prepared a dissertation about how this move will impact the industry,” he recalls. The project got picked up by TATA AIG and soon enough he landed a plump job in its marketing division. Thereon, for the next five years, Dua moved from AIG to Franklin Templeton Investments, absorbing along the way valuable information about product innovation and early adoption and evolution of technology in the financial services and insurance industry. “In fact, this laid the foundation for me to learn nuances of this industry from ground-up; that too, at a time when it was witnessing drastic changes,” he adds.

It was in 2008, after a long work stint, that the entrepreneurial bug bit him and he co-founded Enser Communications, a customer and sales support platform for the financial services industry. The startup later morphed into GlitterBug Technologies, which digitally empowered insurance companies in India. “Around 2010, the systems and processes at these companies were still developed from the point of view of an agent; wherein a file would be moved from one department to another,” he recalls. The goal for Dua and his team was to bring all internal systems and processes onto a single platform, so that customers could transact online at ease. Its clients comprised HDFC, Aviva and the like. “While we were scaling up on revenues and growing organically, there came a time when the company couldn’t be further scaled without a large amount of funding,” he reveals. This was in the year 2012.

2012: The Turning Point

The founders evaluated the pros and cons of what they had achieved so far. “At GlitterBug, we had five to six clients, and by then we’d also gained sufficient market, marketing and technology understanding,” Dua remembers discussing. It was then that a thought struck them; why can’t we build a MakeMyTrip for insurance? Isn’t B2C a lucrative business? “It was. But we couldn’t do both B2B and B2C. It was a trade-off, one of the toughest decisions we had to take,” he notes. The founders spent the first half of 2013 researching regulations & policies in the B2C space and charting a way forward for their B2B venture. “In the end, we decided to shut down Glitterbug. We gave up our office, scaled down the employee strength to a core team of six to seven members and banked on the revenues from our B2B clients,” shares Dua. In August 2013, the company received its IDA license and by January 2014, it got a go ahead from the regulators.

At that time, B2C saw just a handful of players, the foremost being Policybazaar. But Dua’s contention is, though the company (Policybazaar) has listed all insurance products on its platform, not all insurance policies can be sold online. “Some insurance policies are difficult to sell online. They need more explanation which in turn demands that they have a large backend customer support and call centre. This increases overhead costs,” he opines. This very logic became a key differentiator for Coverfox.

It focuses only on car, bike, home, health and travel insurance, which need minimal customer support interaction and are easier to research and buy. That being said, the team, during its initial launch, had to do a fair bit of groundwork in installing the technology into client platforms following which, it would be linked to the Coverfox site. “This took us four to five months. Eventually, revenues started coming in,” Dua adds. The company works on a typical brokerage model wherein it takes 10 to 20 per cent commission based on the nature of the product. In terms of revenue, 2016 (calendar year) saw the company record Rs. 100 crore on its premium covers, which it aims to take to Rs. 300 crore by 2017. “We are confident of this growth because once someone purchases a premium car insurance, for example, at least 70 per cent of them come back for renewal next year. It’s a compounding business,” he explains.

“The Millennials may have never entered a bank, and their disposable income would’ve come with shopping for most products and groceries online. When this very group hits 30+ and has the need to buy insurance, they won’t look for an agent. Instead, they will do their own research and transact online. We want to be there when they get there.”

The Growth Drivers

Often in the interview, Dua reinstates that the fintech and insurance industry in India has still not realised the potential of the digital medium. Heralding the onset of an ecommerce-kind revolution in this industry, Coverfox is working hard to target the 25-years-old to 28-year-olds in the country, who, in Dua’s words, belong to the age of Internet. “This age-group accounts for most online usage. The Millennials may have never entered a bank, and their disposable income would’ve come with shopping for most products and groceries online. When this very group hits 30+ and has the need to buy insurance, they won’t look for an agent. Instead, they will do their own research and transact online. We want to be there when they get there,” he explains. Banking on this belief, the team is working aggressively to further scale its online presence. Another key metric to a successful online business is its focus on simplicity of its product and user interface. Given that, unlike fashion or furniture which requires time and continuous engagement, insurance is fairly straightforward, the sooner a customer navigates through the site and makes a purchase, the better. In fact, the team has measured the time it takes for a customer to visit the website and purchase an insurance, and reduced time taken from 12 minutes (the previous year), to five minutes now.

Another new feature the company has launched is, Expense Doorstep Claims Service. Currently available in Delhi NCR, Gurgaon, Mumbai and a handful of other cities, it allows customers to have their vehicle picked up, serviced and dropped back, all within three days. “We fulfil this by partnering with third party insurance companies, and floating drivers (through concierge services), hence making the entire transaction paperless,” Dua quotes.

Into The Future

Funded over two rounds (Series A&B), the Mumbai-based startup has raised thus far US $14 million through Accel Partners (India & Global), SAIF Partners. Its team now comprises 200 employees, working across backend operations, marketing, technology, finance and marketing. Asked about the company’s three year goal, Dua notes, “We aim to touch Rs. 1,000 crore in premium billing by 2019.”

Unlike few other sectors, where the challenges primarily lay in the consumer or marketing side, Coverfox is grappling with an industry which is highly regulated and comes down heavily on deviations from its policies. Despite these, Dua hopes that the industry’s policies will improve over time, thus allowing many such players to innovate at ease.

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