''The first four months of the financial were very robust and we were growing at 50% plus in that period. The next four months, the demand was muted and our growth rates were in the 20-30% range.''
Policybazaar, which accounts for roughly half of India’s internet-based insurance purchases, is expecting to clock a growth 30-40% for the financial year 2021. This will be against an average growth of 50% over the last few years. The insurance aggregator’s chief executive officer, Sarbvir Singh talked to Mint about the challenges that the covid-19 pandemic posed during his first year at the company, the next big thing in the insurance sector and the company’s key focus areas. Edited excerpts:
You will complete one year as CEO of Policybazaar in February. During the last year we saw once-in-100-year pandemic, which resulted in a never-seen-before bump up in insurance demand. How would you describe your experience?
When I joined about a year ago, Policybazaar was doing extremely well. The last one year too has gone very well for us in terms of how faster we have grown than the industry and our ability to build our franchise as a digital platform.
When a big event like covid-19 happens, people are reminded of their mortality and the need for insurance, which tends to increase demand. The pandemic was one such event.
The origin of the modern insurance industry is The Great Fire of London (1666), in which people lost a lot of money and assets. After that, the first insurance company was created and demand for insurance took off. So, covid-19 has been a big wake up call. In India, a lot of people have come into the category over the last year and are likely to stay with this product.
What are your new focus areas?
One growth vector is around segmenting the business, which means that earlier were looking health insurance as one business, but now we are looking at health in terms of segments such as young customer, family segment and people with pre-existing diseases. Second focus is around regional expansion such as South.
Third area, which is slightly new business where we were not present in a big way is the group medical health business. We have big plans to expand in this area in the next financial year.
After the big pandemic push, insurance demand flattened in the last two quarters. What kind of growth are you expecting during the financial year?
The first four months of the financial were very robust and we were growing at 50% plus in that period. The next four months, the demand was muted and our growth rates were in the 20-30% range. Then December saw some acceleration and January so far has also been pretty good. This year we are expecting to settle in around 30-40% growth range. In the last few financial years, we had grown in the 50% kind of range. So, this does represent a slowdown from what we normally used to achieve.
The demand for insurance is definitely going up, but the challenge is affordability. The covid-19 has been a catalyst for insurance demand, but it has also caused job losses.
The year 2020 brought standardization and digitization to the sector. What will be the next innovation that will drive growth?
If you look at the last five-10 years, there have been three broad trends in the insurance business. One is the shift towards protection covers such as term insurance. The traditional insurance products used to be investment cum protection cover. Also, the health insurance business finally crossed motor insurance last year. The second trend was the digitization of insurance products.
The third trend, which we have been trying to drive, is the simplification of insurance products, which means that policies should be very simple for the consumer to understand and choose. This will be a big force in driving insurance demand going forward.
What kind of demand push do you see from standard insurance products?
Take example of Corona policies, which were very successful, and they were the need of the hour. More than 30 lakh corona policies have been sold industry-wise so far. This policy brought in a whole new set of customers into health insurance and some of them are migrating to comprehensive health covers.
Standardized policies create a simple and easy to understand framework, but at the same time, there are products available that are also good value for money and have slightly advanced features.
So, standardized policies are good entry-level products. Anything which makes the policies simpler to understand and easier for the customer to buy is a good thing and they are helping in creating a market.