Insurance is not a very glamorous topic but it is discussed at some point time in every person’s life. For some, it can be a debate about whether one should get insurance at all; for some, it is about which insurance to get and for others it is about finding out the best way to manage their policies. We looked at the latest 2013-14 annual report from Insurance Regulatory and Development Authority of India and it says that just over four per cent of the Indian population is insured (life and non-life). Varun Dua, cofounder of Coverfox says that of this, only about two per cent is buying and managing insurances online.
Founded by Varun and Devendra Rane, both professionals from the insurance and tech industries, Coverfox aims to push the envelope for both these numbers. Firstly, more Indians will be buying insurance and secondly, a large segment is now looking online. Coverfox managed to get an IRDA Direct Broker licence in early 2014 and it has been almost 18 months since it started functioning operationally. In this period, it raised a Series A round of USD two million and followed it with a USD 12 million Series B round in April, 2015 from Accel Partners and SAIF Partners (also a TechSparks 2014 company). Based out of Mumbai, Coverfox is now a team of over 220 people working towards the time when online insurance space hits an inflection point.
“To give a few global benchmarks, 57 per cent of people manage and buy their insurance policies online in the UK. In Hong Kong, this number is around eight per cent. For emerging nations like India, it would take a couple of years before we hit that point,” says Varun. Whenever one thinks of insurances in India, an LIC agent will definitely come to mind, but times are changing. There are a few underlying flaws in the agent model which is making it irrelevant; one of the biggest reason is that many of the insurance agents try to deceive the consumer or keep the consumer in the dark when selling a policy. Secondly, most of the agents can’t reach out of their circle of friends and family. Many banks are now selling their own insurance policies and a lot of things are moving online as well.
Still, insurance remains a primarily offline play. “PolicyBazaar and ICICI Lombard are probably the only two large players who are pushing to move things online,” says Varun. PolicyBazaar recently raised a massive USD 40 million round from Premji Invest and a set of new and existing investors like Tiger Global and Ribbit Capital. For Coverfox, the focus is on auto insurances at the moment. “We started out with health insurance and then added auto insurance. Our growth in the auto space has been very encouraging and we’re aiming to become the top player for auto insurances in the next couple of months,” he adds. Coverfox doesn’t give out exact numbers but says that the company has grown 400% over the last 6 months and the current rate is 40% month-on-month.
In terms of revenues, Coverfox works on a straightforward brokerage model where Coverfox receives brokerage from the insurance companies. Insurance market is a highly regulated area and companies cannot discount prices, like in the case of e-commerce companies. For an end user, buying a small ticket insurance like auto can be a bit cheaper but for more complex insurance policies, online provides convenience. “Very few people understand insurances properly. The policies inherently are made in such a way that help is required for an end user to understand the conditions. The first set of changes is coming in from insurance companies themselves wherein they are making things easier to understand,” says Varun. He gives an instance of a health insurance which requires a person to pay Rs 1,500 a year and the person is covered for cancer, with no strings attached. This is the kind of transparency that needs to come in.
At Coverfox, there is a support team of 100 people which work to make sure that people have a clear understanding of the policies. They have a claims team as well which has the licences to act as an official intermediary for a customer to make claims. Coverfox has a 50-member technology team and the rest of the team looks at various areas like product, business, sales and vertical experts.
Globally, the West has been seeing companies like YCombinator backed SimplyInsured, Oscar health Insurance, etc. coming up. The biggest news came in when Google got into auto insurance in the US and there are reports of Google spreading its wings. But all over, it is still early days and the industry is a tough one to survive in. When it comes to India, Coverfox will be focusing more on spreading awareness about the industry. It is amongst the top few and if the space successfully transitions towards a predominantly online model, Coverfox would be in a pretty position to grab a share of the pie.