Insurance has to be more about coverage per person than number of plans sold, says PolicyBazaar CEO Sarbvir Singh

DH INTERVIEW

Bengaluru: The Insurance Regulatory and Development Authority of India (IRDAI) envisages that India will leapfrog into becoming the sixth largest insurance market within a decade. The projections are that the market will reach Rs 18.5 lakh crore by 2026. While the conversation on the country’s insurance ambitions revolves around market penetration, Sarbvir Singh, Joint Group Chief Executive Officer, PolicyBazaar Fintech, in a tête-à-tête with DH’s Lavpreet Kaur underscored the pitfalls and trends to be negotiated on this path, while also discussing his own company’s outlook.

Edited excerpts.

IRDAI envisions that all Indians will be insured by 2047. Do you think India is on track to getting there? 

See, 24 years is a long time so it is difficult to make predictions about 2047. But directionally we are well placed to get there. There are three key reasons for that. The first is that the middle class is becoming bigger and it is important because insurance is actually a middle-class product and this segment is the key driver - the very rich don't need insurance and the very poor can't afford it. Secondly, digital rails are becoming more available which makes it convenient for customers to buy and avail insurance. Thirdly, the regulator for the first time has taken a developmental stance, not just the regulation of the industry.

What is your reading of insurance penetration in India and how has insurtech helped in bolstering it? 

The measure as a percentage of GDP which is thrown around for insurance penetration is misleading. I think we have to peel the onion one more layer. The actual way to look at insurance penetration is product per person. Interestingly, 25-27 crore Indians have life insurance, but do they have proper life insurance - no. If the amount of cover is not enough, then you don’t have a policy. One big challenge for life insurance in India is that while people are aware, the sum insured is too small leading to a significant protection gap. So the focus of the industry has to shift from how many are insured to how much sum insured you are selling.

How is the phygital medium impacting the sales of insurance and how is authenticity being maintained?

We are still at a stage where the number of people researching online is higher than those buying online. Some are worried about making payments online, others might be concerned about authenticity. There is in general a lot of anxiety associated with insurance products and if we can reduce that anxiety - it helps immensely. 

Do you believe that digital disruption will be the primary success driver for the industry?

I think it is difficult to say that. Frankly, we haven’t really seen anyone scale at that level at least in terms of serious insurance business which includes health, term and savings insurance which are bought after a lot of thought and mandatory products like motor, two-wheeler, travel insurance which might not involve a lot of thought. Insurtech companies that have come up, do better in, what I call, the attachment products, e.g. screen guard insurance with mobile phones and this is a different business altogether. However, they have a long way to go. 

Retail health insurance sales have picked up after the pandemic. What about other categories? 

Term insurance is actually the most efficient insurance product that exists but has not received enough traction. Only 50-60 lakh Indians have term insurance, which is woefully small. India really needs it because we do not have social security. 

Health insurance has picked up after the pandemic, but there’s still a long way to go. Again, the number of people who have the right kind of health insurance is still low and there are concerns about usage, claims etc.

What are the trends across urban and rural markets? 

Earlier 2/3rd of our business would come from metro cities and roughly 1/3rd from the tier-2,3 cities of India. Now with the digitisation wave, the trend has totally reversed. Now 2/3rd of our business comes from tier-2 and 3 cities and 1/3rd from the metros. That has been a very heartening change. 

What is your outlook on India’s insurance industry in the short and long term?

Our four big businesses are - health, term, savings and motor (four/ two wheelers) and they’re all roughly within a few points of each other (in terms of size). For the foreseeable future, these four will remain our largest businesses. However, home, cyber, and pet insurance are emerging areas that will become big. On the corporate side, we are a smaller player as of now and that could rival other segments in the next five years. 

What next for PolicyBazaar? Any plans to get into a new segment or change strategy?

We believe that we are relatively early in that game and could be 10 times larger than what we are today as the country gets richer. The market is growing, and it is moving online - so both trends are in our favour. Our focus stays on insurance, but we are targetting growth in more segments. You will see us doing more things in PaisaBazaar, where we sell financial products. We have a business in Dubai that does both insurance and lending and will continue to grow.