[The Turning Point] A bad experience with an insurance broker led to the launch of Policybazaar

PB Fintech, the parent company of PolicyBazaar and Paisabazaar, which launched its IPO this week, began life as an insurance marketplace that was launched after a personal bad experience. 

Policybazaar was started by Yashish Dahiya, Alok Bansal, and Avaneesh Nirjar in 2008. All three are IIM alumni; Yashish is an-IIT Delhi and INSEAD alumnus as well. 

Yashish Dahiya recalls that a bad experience with an insurance broker led to the idea of an insurance marketplace. His father was sold insurance policies that benefited the insurer and the agent who sold the policy; it had nothing for the customer. 

“Most plans pushed by agents are traditional commission-based plans that benefit them. Once sold, such policies have 60 percent chances of lapsing,” Yashish told YourStory earlier. 

His experience was the foundation stone for starting Policybazaar.com, which after 14 years has become the largest online platform for insurance, lending products, and other financial products. 

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The early days

Like any startup, the early days of Policybazaar were full of challenges. It started as an aggregator, providing information on insurance policies of more than 30 insurance companies. Customers coming to Policybazaar.com could check out products, compare them, and then go to the insurance company’s site for the actual policy booking. 

The co-founders continued this way for three years until the first set of regulations from insurance watchdog IRDA put the brakes on their advertising revenues.

This mandate was a problem because as per the new regulations they could only make Rs 1 lakh a year on advertising a product. At that point in time, the company had revenues of Rs 20 crore; the new mandate would set them back by more than 90 percent in revenues. 

The regulations led to a lot of internal restructuring in the company. They had to move out their marketing and call centre operations, and subsequently Policybazaar was relegated to handling sales and backend operations for insurance companies. 

The turnaround

However, things changed after clarity over the regulations, and the company evolved. 

In 2011, Yashish had shared that despite regulations restricting Policybazaar from making a commission on digital products sold, which was a bulk of what they sold at that time, and advertising revenue being banned, their customer base exceeded five lakh and grew at 100 percent YOY.

Policybazaar was the first internet-based platform to sell insurance and loan products of various companies. 

Paisabazaar, the credit comparison platform of the company, was launched in 2014. The company has grown its consumer base over the past few years; it had over 48 million consumers registered on the Policybazaar platform as of March 31, 2021. Around 9.6 million unique consumers purchased over 19 million policies from its insurer partners in FY21. Paisabazaar is widely used to access credit scores, with approximately 21.5 million consumers having accessed their credit score through the platform as of March 31, 2021.

The journey of PB Fintech has been topsy-turvy. But Policybazaar, now claims 93.4 per cent market share in the insurance marketplace. Its digital consumer credit marketplace, Paisabazaar, holds 53.7 per cent market share. 

Yashish said Policybazaar has had its fair share of challenges – of establishing trust among consumers, regulators, and insurers alike. 

“We had to work very hard to make people realise the merit of purchasing insurance online and how comparison is truly the only way. No one succeeds without perseverance and this sole quality is what guides you through dark nights and difficult days. One needs to have a steady course of action, persistence, and must hold their ground, irrespective of difficulties, obstacles, or discouragement,” Yashish said.