These fintech startups are moving beyond digital payments and lending to disrupt how insurance is sold and consumed.This is as per a report in the Economic Times.
“Insurance is traditionally a pull product, it has to be sold imaginatively,” said Animesh Das, head of product strategy at Acko General Insurance. The company, a spinoff from Mumbai-based insurance marketplace Coverfox, recently secured a general insurance licence.
“We are trying to unlock multiple channels through which we can offer innovative and relevant products, which are not offered by traditional insurers and may take time for them to activate or service. Consumers in the age group of 25-30 will become decision-makers and our main target segment in the next few years.” Das said.
Acko has partnered with cab aggregator Ola to offer insurance for taxi rides, a product the company says is already seeing significant traction. While booking an Ola cab, customers can insure the ride against a breakdown or unpredictable traffic that can result in them missing a flight by paying a premium as low as Re 1.
Bengaluru-based insurance startup Digit General Insurance, too, is focussed on innovative products catering to millennials.
Digit’s smartphone protection policy not only covers damage to phones but also offers pickup and drop facilities for phone repair. The company offers this service at 6,000 pin codes across India.
“We did a lot of market research to find out what kind of products are needed. For instance, if a phone is damaged, we can run software remotely to scrutinise the phone and tell the customer how much it might cost to repair the device, and then also offer pickup and drop,” said Jasleen Kohli, chief distribution officer at Digit.
“Traditionally, insurance companies give protection against lost luggage. We are providing a much more common use case of insurance against flight delays, and consumers can claim it by just clicking a picture of the boarding pass,” said Kohli.
Digit Insurance offers (travel insurance) plans for flight delay starting from 75 minutes, trip cancellation due to an accident occurring to any member of the travelling party, delay in checked-in baggage, missed connection (due to a connecting flight) etc. In mobile insurance it covers something like screen damage. In jewellery insurance, it covers loss of jewellery (even if the jewellery is worn by the insured or by anyone else). In case it gets lost anywhere in the world, the insurance will cover it. Digit is also working on products like pet insurance, where pets can be covered against health expenses incurred at veterinarian clinics.
While these startups are designing their own products, Gurugram-based Toffee Insurance is working with legacy insurance companies to offer customised products.
Founded by Rohan Kumar and Nishant Jain, Toffee works with seven insurance companies including Apollo Munich and Future Generali to offer products like dengue insurance, fitness insurance, daily commuter insurance, and backpacker insurance.
“In case of fitness insurance, you are protected from basic out-patient department expenses of up to Rs 5,000, which can be claimed by showing the doctor’s prescription,” said Kumar.
Toffee’s insurance plans include daily commuters insurance, dengue insurance, home renters insurance, fitness insurance and breast cancer insurance. The innovation comes in the breast cancer insurance where it is not designed like the coverage offered by major insurance companies. It covers minor and major stage breast cancers. At the detection of the disease, it pays a certain amount. The coverage can start with one year and extend upto ten years.
While these new-age companies have the potential to disrupt the insurance sector, most of their products need support at an ecosystem level. The customer needs to be digitally connected and empowered to undertake the end-to-end process digitally. That requires other simultaneous processes to be digital as well.
“If a company is offering health insurance, then customers need to be taught that healthy living will be rewarded with lower premiums. These companies will have to spend to create that ecosystem-level awareness,” said Sachin Seth, digital and fintech leader at Ernst and Young.
India’s insurance sector still has some way to go to catch up with countries like South Africa, perhaps one of the most developed insure tech markets in the world, said Seth.
Industry experts say digital insurance companies also need to reimagine their products for rural markets, where insurance as an industry has hardly penetrated.
To reach the next billion users, these companies will need to go out of their way to accommodate the demands of those markets, which can be challenging without any physical presence. Also, tackling frauds in this space in a completely digital manner could be difficult.
“We will take time to find out the risky pin codes and with technology we will be continuously evaluating data from our customers, which will help our systems get better with time,” said Kumar of Toffee. “Till then, we have to experiment with different products across the markets.”