Akshay Mehrotra, CMO, Policybazaar.com talks to Pitch on the business prospects of an online facilitator of insurance sales and how the brand is taking shape in the online space. He also discusses the cost effectiveness of e-retailing for the insurance business to pull down massive distribution costs and simplifying choices for the end consumer. Excerptsâ€¦
How did the idea of Policybazaar.com originate? Please elaborate on the consumer insight that triggered the need to launch a portal?
Insurance products are very complicated and customers get very confused while buying insurance. We noticed some insurance portals like money supermarket.com and confused.com in UK and Europe offered comparison services to consumers. Also online e-retailing of insurance help reduce massive distribution cost.
The model seemed very interesting and we thought a very large scalable business model could be built around this.
Currently, in India they are 48 insurance companies and close to few thousand insurance products. Letâ€™s take an example, If customer wants to buy the best health insurance today he will need to meet agents from 32 companies offering health insurance and go through all their product offerings. It will take this person almost a month before he is able to narrow down the product he can buy.
While today on Policybazaar.com you can compare insurance plans from insurers and find the best plan for you within minutes, compare features on a click of a button and get the exact premium for it. The second part of the business which is very much hidden from consumers is online e-supermarket which allows distribution cost to be drastically come down and typically work as the lowest distribution format in the market. Products, which have less commission, have better returns for customers and lower premiums cannot be sold by traditional agent distribution formats. Whereas online we are able to drastically reduce distribution cost and products like Term Insurance, ULIPs & Car insurance is very well getting retailed online.
Insurance in itself is a very tough product/industry to sell. How do you think the portal helps you find the challenges that most brands in this sector face on-ground? Are the challenges different here?
The unique capability of Policybazaar.com to provide comparison makes customer interaction every easy. In some products like term insurance and car insurance customers are looking for the lowest buy. We provide an easy comparison a direct e-commerce platform, for consumers to buy online. Whereas some products, which need concept selling and not just comparison. For which, we provide an online comparison capability along with phone assistance to help customers make select the product they need. Consumers can then look at buying these products online also. Today close to 10,000 transactions happen online through policybazaar and another 20,000 policies are sold through referred customers who compare online before they buy.
What are the key differentiators/USP of the portal? How is it different from competition like i-save.com and click2insure.in?
There are 3 key strengths, which allow policybazaar.com to be different from competitor portals:
1) Online platform, which connects 42 insures and allows comparing and directly buying online.
2) We are ecommerce portal and not a leads aggregator â€“ we help you compare and buy online and not just generate a leads to sell to others.
3) Strength of a strong team who understands ecommerce and not just insurance who has build ecommerce platforms across the Europe and UK before India.
Do you also sell insurance products online? Or do you focus on lead generation? What is the objective of the brand?
We focus in facilitating online insurance sales. Although 15 per cent of our revenue is currently linked to lead generation but these are for products where online tractions are few and less products are available online.
With strict IRDA guidelines, where aggregators have been barred from ranking or commenting on insurers or products, what has been Policybazaar’s strategy and method of functioning?
Policybazaar calls for comparison from an approved IRDA aggregator. The IRDA guidelines are very discouraging for a business like ours. We were forced to remove customers rating and comments from the platform because of this but the advantage we get is that now companies by regulation have to share their rates and charges with us for all products, which help get more and more products on our platform. We are hoping that in the next three months we can add 300 more products to our platform.
What is the opportunity in the digital space in India for brands like policybazaar? What according to you is driving the growth of this segment?
Policybazaar.com got two crore unique visitors last year. The number of customers is more than the total traffic all insurance companies, put together, get on their website. Today, we only are able to convert less than 0.5 per cent of these customers. The potential is very huge considering only 0.4 per cent of insurance is being bought online currently in a country that sells more than 70 lakh insurance policies each year. In the UK 70 per cent of all insurance policies are sold online.
What is your annual and monthly turnover? What is the number of monthly and daily unique visitors on your site?
We last month got close to 20 lakh unique visitors each month but this traffic goes up by 2.5times in the last four months of the financial year. Total unique customer visit last year was two crore. Currently, new business premium sourced through customers visiting Policybazaar is over Rs 200 a year.
What is your marketing budget for the digital space? What are the key marketing tools you use to communicate to consumers?
Our digital marketing spends are between Rs 28-30 crore this year. 65 per cent of these spends are pure on Google Adwords. The rest 35 per cent of these spend are equality distributed between display, mailers and online network buys.
Our marketing campaigns are pure performance driven, we follow Cost of Acquisition & Cost per Lead matrix to optimise our campaigns.
What are the challenges and opportunities you see in this segment?
There are three main challenges in our business:
1) Lack on online distribution and pricing system for insurance. In the absence of the same we had to build physically build online bridges with each company for every product to make it available online for customers.
2) Regulatory atmosphere, which makes the business model very uncertain.
3) Very small portion of the market and product base being online today only 70 products can be bought online.
But these challenges provided a huge potential at 10,000 policies being sold online through us already. In my opinion in the next three years close to 50 per cent of the market will move online and ecommerce players like us will benefit a great deal.
What are the key trends in the buying patterns of consumers online?
We see a clear shift, customers now have moved from search to research before they buy. During the period 2003-05, people used to search for flight options from Delhi to Mumbai on Google. By 2008 people started to more actively research about flight options on travel aggregator websites like Makemytrip and Yatra to get a better rate or a better offer on the ticket prices. Today more than 60 per cent of all itemâ€™s sold online are tickets both air and train.
We today see customers having a similar shift in case of their insurance purchases. Close to half a million customers a month do a detailed research of insurance planâ€™s on our site but transactions are still very few. But we expect conversion numbers will increase to nearly 10 â€“ 20 per cent conversion over the next 18 â€“ 24 months.
What are the new strategies that websites are adopting to lure consumers like Trial and Buy, buy online and pick up offline etc.?
Our current focus is to provide a consultative approach to our visitors, especially for products which require a little more understanding. Insurance plans like pension, child, money back & health insurance can be customised to suit customer needs and not many customers today are able to do this themselves. Customers need to understand these products, before they buy them. In the next few weeks we will be introducing a range of modules on our website, which will help customers use this consultative approach to narrow down the product best suited. We recently introduced direct phone support for customers who need assistance a little more than those who understand this category.
Do you think this growth in e-commerce/e-retailing in India is sustainable or can it be another bubble that may burst soon?
Ecommerce is here to stay, we see many customers now getting comfortable buying online. Today ecommerce brands need to focus more on improving backend efficiencies and improved product catalogues to product depth. Customers are very keen to buy, but what currently restricts them is a limited knowledge about the product range available. In my opinion the sector will expand and grow immensely.