The Anatomy of PolicyBazaar
Startups and **** Series
IPO bound policybazaar grew as a symbol of trust for consumers in a shady insurance sector where agents often misrepresented benefits and hid critical information. Over the years, the company has marked a staggering growth in terms of consumer traffic and the number of people using the platform to buy insurance products and has become the “destination site” for all insurance-related queries amongst Indian consumers. In this piece, let’s dive a little deeper to understand the story, the market and how did policybazaar ride on consumer trust to become the behemoth it is.
Overview
PolicyBazaar is an online life insurance and general insurance aggregator and marketplace that analyzes financial products. It provides information across products such as medical, term life, travel or motor insurance and other investment products, helping consumers to compare and analyze various financial products. The parent company also owns paisabazaar, docprime and quickfixcars.
Market and Background
The highly underpenetrated insurance sector in India is a $280bn market. It has seen major growth over the last decade owing to the introduction of a large number of advanced products. This has led to tough competition with a positive and healthy outcome.
The Indian insurance sector can be broadly segregated into 2 parts Life and non-life(general) insurance. Out of the 57 insurance companies in the country, 24 are life insurance providers and the remaining 33 are non-life insurers. As per the latest data, Indian insurance penetration stands at 3.76% with life insurance penetration at 2.82% and non-life insurance penetration at 0.94%. Though life insurance has been and is expected to dominate the sector many fresh non-life insurers have been making strides in the market with innovative models.
The online insurance market is highly competitive, online aggregators and marketplaces have an edge in pricing owing to reduced cost of operations which is transferred to the consumers but over the course of time as the space got crowded this has become core to the business and it has become increasingly important to keep prices competitive to remain relevant. For someone like policybazaar which earlier competed with other aggregators who sell through the platform without owning the product, other players such as acko are quickly rising which own and sell the product online making the space harder to compete in.
The insurance landscape is currently seeing a shift with innovation in products and realigning strategies according to the customer needs. However traditional methods are still dominant As per the PWC report, 27% of the insurance buyers still relies on Word of Mouth, 22% on Agents, Among the rest 50% the market is very much fragmented, only 20% of the consumers rely on the online aggregators such as PolicyBazaar, these 20% are shared among all the players in the market. Covid has accelerated the shift but it is still far from significant.
The market is still very underpenetrated, growing interest in insurance, innovative products and distribution channels are aiding the growth. IRDA and govt have bought in a lot of welcome regulatory changes and policy support along with inflexion of funds which are helping the sector boom. With all ingredients in place, insurtech is the next big thing to look at!
Journey and Strategy
Yashish dahiya the founder of policybazaar is an alumnus of IIM A and INSEAD. Yashish started his career at Illinois Tool Works and later moved on to Bain & Co. to work as a Management Consultant and went on to work with First Europa, a Global Online Insurance Broker, as their CEO Before starting his entrepreneurial journey with PolicyBazaar.com.
The idea of policybazaar came to yashish when his father was duped by insurance agents, he saw a lack of transparency in the market, insurance agents would often misrepresent benefits and hide critical information for a few extra bucks and overall trust for insurance was very low. Yash saw the opportunity and built policybazaar on the grounds of trasperency and openness to help customers make informed decisions. The result was strong consumer trust in a trust deficit market which resulted in rampant organic growth.
It has been a challenging road for policybazaar which has battled major regulatory changes around lead gen price caps, an underpenetrated market and customers hesitation to buy policies online, but the need was there and policybazaar survived capturing the lions share of the online market keeping other inspired upstarts at bay. Policybazzar constantly keeps improving on its experience and features keeping customer needs at the core, kept which caters to its continued dominance.
Policybazaar stated in 2008 as a website to compare policies and earned majorly from ad revenues, now policybazaar covers the whole cycle from helping you buy insurance to renewal to cancellation. It has also forayed into other sectors via subsidiaries paisabazaar, docprime and quickfixcars. As of March 2021, over 4.8 crore consumers have registered on Policybazaar platform and purchased over 1.9 crore policies from insurer partners. In FY21, the annual number of visits on Policybazaar website was 12.65 crore. It has so far raised $776 Mn in funding has been constantly innovating models and strategies to stay relevant and on top.
Business Analysis
To draw an analogy you can consider policybazaar to be an e-commerce portal for insurance. It earns a commission from the sale of the insurance product and also a part from advertisements, listing and marketing services. The company has tie-ups with insurance brokers to list information such as price, benefit, insurance cover on the platform for the customer to compare. Basis the information provided by the platform, the customer then chooses the best option. PolicyBazaar does not charge its customers anything for their service and charges the broker a commission upon purchase by the customer and for fixed marketing services.
Conclusion
Policybazaar is a classic example of a customer-obsessed startup. Its zeal to constantly improve on product, experience and service has kept it afloat, it is expanding outside India and with the IPO roaring in the latter part of the year, It is only going to adapt, innovate and grow.
Sources: Entrackr, cruchbase, startuptalky, AJVC blog, moneycontrol, Inc42, economictimes, fintrackr, Policybazaar website.