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The B2B insurance distribution masterclass | Aatur Thakkar @ Alliance Insurance Brokers
301 Plays1 year ago
Aatur makes a compelling case for the indispensable value that middle men bring to the table in business. With Alliance Insurance Brokers being one of India's largest offline insurance distribution companies, he shares his expertise on how middle man businesses can drive scale, enhance product quality, and respond more effectively to customer demands.
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Read more about Alliance Insurance Brokers:-
2. How to ensure the best insurance for employees
3.The Transformative Power of Marketing in India’s Insurtech Sector
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Transcript
Introduction to Atu Thakkar and the role of middlemen
00:00:01
Speaker
My name is Atu Thakkar. I'm the co-founder at Alliance Insurance Brokers and also a startup founder at elephant.in.
00:00:24
Speaker
A lot of started sounders talk about the middleman as someone who needs to be disrupted and removed from the chain between manufacturer and customer. After all, the word direct to customer is nothing but a declaration of war on the middleman.
00:00:39
Speaker
But in reality, the middleman plays a supremely important role in helping the manufacturer reach scale, build better products and be more responsive to customer needs.
Growth and Impact of Alliance Insurance Brokers
00:00:50
Speaker
This episode is a masterclass on the value of building a middleman business and how to scale such a business.
00:00:56
Speaker
Arthur Thakkar runs Alliance Insurance Brokers, which is one of the largest offline insurance distribution companies in India. And he has been a pioneer in the insurance domain, from helping ensure new and unique types of liabilities, to being one of the few companies in his space to secure PE funding. Stay tuned for Akshay's insightful conversation with Arthur Thakkar, in which he learns how to scale a distribution business and the amazing disruption Arthur is bringing about in the insurance sector.
00:01:33
Speaker
Let's first understand a little bit about the scale and scope of Alliance. How big is Alliance? What kind of, what are some of the metrics that you can share with our listeners about Alliance? So yeah, so Alliance operates across 16 cities in India. We are a team of more than 500 people.
00:01:59
Speaker
We ensure and cover almost every sector from space to manufacturing, to sports, to media, to diamond, to jewelry, to IT, to infrared, to renewable energy.
00:02:15
Speaker
So, we are a very well spread out you know advisory brokerage firm and we service around 3000 customers on the corporate side are around 10 lakh individuals on the health side and an equally larger number on the elephant which is a retail arm of alliance.
00:02:40
Speaker
We were born in 2003, so we are, you know, a little about 21.
Corporate vs Retail Focus: Alliance and Elephant.in
00:02:44
Speaker
So we're kind of, we're adult now. We were no longer a team. And in terms of our premium that we broke,
00:02:56
Speaker
ah it is a little above 2000 crores that makes us one of the largest ah Indian player in the space ah not only the largest Indian player, but also the largest publicly private equity funded Indian player in the space ah and this gives us access to capital ah almost at will ah to allow us to expand the horizons either on
00:03:25
Speaker
technical parameters, geographical expansion, technology stack, and ability to service our customers without capital being a constraint. Okay, I want to zoom in on some of these metrics. At 2000 caravas worth of premium collected, so this would be like bigger than the online players also like say a policy bazaar or all of these? No.
00:03:53
Speaker
We would be larger than almost everybody. But policy bazaar is more on the retail side while we are more on the corporate side. So it's not a fair comparison. And they are an inshore tech arm while we at Alliance are prime businesses B2B and not B2C. The B2C arm is elephant, which is our inshore tech subsequently.
00:04:23
Speaker
So yeah, and you could also pitch us like we would be larger than a lot of even insurance companies, some of the insurance companies in this. So not just in the broking segment, but also in terms of the premium and the management will be larger than some of the insurance as well. Okay. Amazing. And your earning, your revenue would be some percentage of this 2000 crore premium collected.
00:04:48
Speaker
Yeah, for the listeners and for you Akshay, this is a very regulated industry. Everything is very transparent. Our regulator IRDA regulates our earnings. So yes, being a brokerage firm and an advisory firm, we would advise our customers what to buy.
00:05:13
Speaker
from where to buy, at what price to buy, how to buy it, how to structure it, and which are the carriers or insurers we should be using for that risk transfer. And yes, our fee would be a percentage of the premium that we park. What's like a blended average percentage number? It could range from 10 to 12%.
00:05:38
Speaker
Okay, got it. Okay, so yeah, that gives me a fair idea of the business. Let's talk about your journey.
Foundation and Evolution of Alliance Insurance
00:05:47
Speaker
Did you always want to be an entrepreneur? How did you end up becoming an owner? So I'm basically a charter accountant by profession. And
00:06:00
Speaker
When we were in college, besides doing my articleship, which was more like a 9 to 5 job while you're studying in your higher education, I was running an entertainment company called Planet Entertainment.
00:06:21
Speaker
And we were three partners. And we used to launch new talents. We used to run certain restaurants and nightclubs. We would ensure those special New Year events are created as a college key. So that started early on for me. And you studied in Delhi. This was all in Delhi.
00:06:48
Speaker
No, this is all in Mumbai. I am very much Bombayite as one can be.
00:06:59
Speaker
I completed my chartered accountancy. Insurance ran in the blood because my father was working for an insurance company. He worked 23 years for United India, kind of co-founded IfkoTokyo in the country. Worked with IfkoTokyo for a long time. And this is when 2003 broking was set up in India. I remember Shriya Talbihari Vajpayee was our prime minister then and the law of insurance was passed.
00:07:29
Speaker
And the father son decided let us ah co-found a broken business. I knew nothing about insurance, he came from an insurance background, but ah
00:07:44
Speaker
nothing about broking. So we both were novices to the business as such and Alliance was born in 2003 and rest is history today. 2003 is when the deregulation happened, they allowed foreign investment in insurance space. Yeah, I think Vajpayee was very progressive.
00:08:08
Speaker
from an insurance point of view and I think you know it's amazing that you know US elections are lost
00:08:18
Speaker
a one based on insurance norms. That's how critical protection is for individuals and businesses. So I think Vajpayee was quite progressive and he got this broking entities in play because we are operating in a perfect conflict situation. Client wants the lowest premiums. He wants the highest cover and he wants claims to be paid with no questions asked.
00:08:46
Speaker
On the other side, the insurers want the highest premiums. They want to ideally provide a restrictive cover and do their risk management. And there are conditions to pay a claim. So now you have a buyer and a seller.
00:08:59
Speaker
who are not truly aligned they are conflicted with their interest and you need someone who will advise the customer and get this job done and that's why globally a lot of countries in broking is mandatory you can't do direct business because you need to be advised and you there has to be someone who is bringing you that advice.
00:09:23
Speaker
So I think India is heading towards that, but yeah, so 2003 was when this started. A couple of questions in terms of the regulatory framework. So prior to 2003, it was essentially agency, right? Like you, and as an agency or an agent, you represent only one or like limited number of companies. No, only one insurance company. Only one insurance company. So you are like an employee of an insurance company on variable pay.
00:09:53
Speaker
Got it. OK. And in case of a brokerage, you represent the client rather than the insurance company. And so you can go and do shopping on behalf of the client, talk to multiple people, get multiple proposals for them, structure it. And sometimes, so a lot of alliance business happens from
00:10:13
Speaker
what we call as structured solutions or what we call as speciality, where the clients want something which is not typically available with insurance companies in India. So, you go and bring capacities from global markets and you stitch up a program, you know. So, all of that is possible in the interest of risk transfer and clients requirements.
00:10:37
Speaker
As long as you have expertise and ability to do this and the brokerage platform allows you and gives you that ability to do it. Okay. Interesting. Who was your first customer? How did you, you know, how did the money start coming in? Well, I remember I was 21 and, uh,
00:10:58
Speaker
I had gone to a company which is called the Anchor Group. We all have heard of Anchor. Electronic accessories, kind of. I would like the plugs in. Yeah, so I remember meeting the owner and pitching to him. He asked me, where's your office? And I told him, we don't have one yet.
00:11:25
Speaker
If you give me the business, I'll have the money to go rent one. He looked like a question mark at me, you know, but somehow I could convince him to write the first check. And what was the insurance product that you sold?
00:11:42
Speaker
It was fire insurance for its factories. Very traditional product. And before you can start selling, do you need an abandonment with insurance companies to sell their products? No, you need a brokerage license which requires a minimum paid up capital, which is 5 crores today, plus 50 lakhs back then.
00:12:08
Speaker
Um, and, uh, you need to clear, broken exams. Um, and, uh, yeah, so you need to be qualified. As I said, it's a regulated business. So we were a small team. We were a team of only three, four people. Yeah. And I mean, 50 likes must have been like your father's life savings types. It was father's life saving plus loans. I can imagine.
00:12:37
Speaker
Yeah. So it was, but it was beautiful, right? Because you are building something up. So I remember my mother would say that, you know, my husband had a great job. He left one. My son is a chartered accountant doesn't want to take up one and none of them are making money. And I don't know what are they doing? I'm clueless. Why are they doing this? And what are they doing?
00:13:04
Speaker
By the end of the first year, how much were you able to pay yourself some salary? How long did it take? I think we were in a position to pay us some salary after the year 1 was over. So year 1 was literally no salaries.
00:13:22
Speaker
It was the second year when we started paying. I remember my first salary was 50,000. Which is pretty good for those days. As a CA, you would have been able to earn equal or more. I had an offer when I co-founded Alliance. I had an offer of E-Team Alliance.
00:13:42
Speaker
from one of the big fours and when we co-founded this obviously there was no pay for the first 12 months while a lot of my friends were working for large firms and making very good money between 18 to 24 lakhs in 20 2003 would be very good a lot of money back then and I would say to some of them listen I'm still not started off
00:14:10
Speaker
I'm still on the stipend 300-400 bucks a month. You must have understood how to scale the business. Can you share that understanding? Was it about getting referrals or was it about meeting a lot of customers and doing a lot of pitches?
00:14:36
Speaker
Was it about building a team which can go out and sell? How did you understand about the insurance brokerage business? What's your understanding of the business and how to scale it? Back then in 2003, 2004,
00:14:53
Speaker
There was no strategy. The strategy was to survive. There was a survival strategy. You know, when you're hungry, you don't choose restaurants. Just grab the food is available in front of you. So the strategy was to go meet as many people as you can.
00:15:09
Speaker
Some would be references, some would be old relationships. I think my father spent a lot of time in the industry, so he had some old relationships, go meet them, get references from them, do a lot of cold calling, and I think that's one thing businesses should never stop doing.
00:15:29
Speaker
Even today I believe you should never stop code calling because everyone wants a solution and they are waiting for someone to knock their doors. So it started off with that. Second year when we had little capital, capital is too big a word for them.
00:15:46
Speaker
We had some money. We could start hiring whoever we could afford back then. So it started off by creating a smaller team. This was like a sales-heavy business, right? Like as an interest broker, essentially your core task is to sell, right? Yeah, absolutely. Yeah, so it was still a CO2. I still remember it was not like a large sales team. It was just a two-member team besides me.
00:16:15
Speaker
So it was, you are hardly able to pay your own salaries. So yeah, so it was, I think it took almost three years, first three years to get to a level where we were in a position to pay ourselves and to the talent we could attract market salaries. So it was 36 months is what it took us to read that. How much were you earning by the third year?
00:16:45
Speaker
I think I was still not paid more than 1 lakh. Yeah, right, obviously. Yeah, so I was still paid almost less than half of what my other colleagues were getting paid. But you're building something for yourselves, right? That's the whole point. What was the business ending by the end of the third year? I think by the end of the third year, we were at a brokerage of around 35-40 lakhs, not publish.
00:17:12
Speaker
Premiums of around 3 to 4 crores. This is annual learning.
00:17:20
Speaker
Yeah. I knew learning of three to four crores or maybe five crores at max. I remember it was closer to five crores because we would have, I still remember celebrating though. We read the first benchmark of five crores, you know, uh, five crores in premiums. So yeah. Okay. So, uh, you know, from, I guess you must have been about like maybe a dozen people by the end of 30 years.
Adapting to Market Changes and Specializing
00:17:44
Speaker
Yeah, around eight to 10 people, we were operating in an office which was 170 square feet. I'm giving you an interview for my boardroom, which is twice that size today. But my entire office was 170 square feet. And the best part would have been that if when someone would come to meet you, it was an unsaid role. Two people have to get out and leave. There is no place for you to sit.
00:18:11
Speaker
If you are a visitor, you can go out and have a cup of tea. It was beautiful. I think that's the best part of being a startup. When did you hit that point of inflection where you would have grown very fast? Suddenly you see that you are 100 member company. I think...
00:18:41
Speaker
We were doing fine till 2008. We were growing steadily. That's five years from the time we started. But 2008, we hit a recession, the global meltdown. A lot of people started losing jobs. Businesses were under pressure. And to couple it with, we got into deregulation on price points. So what used to be the brokerage became the premium. So your incomes actually went down by 90%.
00:19:11
Speaker
in 2008, you could have not timed it in a more worst manner. Just help you understand this a little bit. So till 2008, India operated on a fixed tariff. It was a fixed price for a risk transfer. It was like a ready wreck. Now you would see you will apply a rate. There was no price. There was no open pricing. All insurers would add the same price for the same risk. Okay. So you went on an tariff.
00:19:37
Speaker
which is very simplistic, because risk is so complicated. Yeah, which is simplistic. But when the regulator got into de-tariffing, which it had to, you can't have all cars being sold at the same price and having the same features. Just think of it that way. So the regulator had to get into de-tariffing for more insurers to come in for each risk to be rewarded and rated accordingly.
00:20:04
Speaker
uh, you know, horses for courses rather than painting everybody with the same brush, but it was just timing. 2008 created the tariffing. 2008 also created the whole global meltdown. So you had business under pressure and your brokerages went down by 90%. Well, I know a lot of brokers which shut down. Why did the tariffing affect brokerage? Because you would earn like 10, 12% right? No, but the price went down by 90%. Right. So your earning became 10% of that lower rate. Okay.
00:20:34
Speaker
Like very predictable risk, it became a race to the bottom. Yeah, it became, see, when you, when you tell competition that now you're free to prize, it's a pre-fall, it's like a market going down for the first 12 months, before they realize where the bottom should be and then you start bouncing back. So it's just bad year and very bad timing.
00:20:55
Speaker
I imagine very standard products like car insurance and all must have crashed because everyone would have wanted volumes there and they would have reduced price to get volumes. It was very traditional till 2008. It was very traditional that the majority of the Indian sector had only property and car insurance. Some amount of marine business. The fancy things never came into place till then.
00:21:22
Speaker
Uh, and I think, uh, as you see, you know, need is the mother of all inventions. Uh, it's only when you're hungry, you learn how to climb the tree. Um, so that's exactly the euphoria moment we went through in 2008 markets.
00:21:38
Speaker
not good at all, data I think is almost there to choke you and you really don't know whether you should take up a job somewhere or you should shut down or you should survive or and I think that's when
00:21:53
Speaker
We as a team took a call that, you know, we are here to stay and find we may not have enough headway to run today, but we are going to get into areas where all these market conditions do not affect us. And that's when 2008, 2009 alliance started focusing on what we today call speciality.
00:22:20
Speaker
So speciality was born not out of strategy. It was born more of because speciality, the tariff never applied. It was not property insurance. So we first started looking at can we insure movies? And your own prior experience of running entertainment business would have like
00:22:39
Speaker
Correct. So I started calling some of my old connects, reaching to different people. And I was in no time sitting in Dharma's office in three months. And that's the first movie we ensured. Which movie was that?
00:23:02
Speaker
This was Dostana. This was, if I remember, it was John Abraham and Abhishek Machan. And we are hit with claims.
00:23:14
Speaker
because you had Taj attacks. Oh, right. Yeah. So, but yes, so then Alliance started focusing on speciality. And while we divide, how did you find the insurers who ensure movies like you, you had to like, yeah, you had to do massive convincing. You, you use your historic relationships and you do,
00:23:40
Speaker
technical structuring and you say, listen guys, you are in the business of writing the risk, right? So as long as it's a measurable risk, one needs to write it.
00:23:49
Speaker
So you started convincing them. And the business was then very strategically divided between speciality and what we call as a corporate business. The corporate business remained a brick motor business. Speciality became those fancy things which nobody wanted to underwrite or there was no focus on it. And then that's how the business started being built.
00:24:14
Speaker
So you started with media, then you got into sports, then you got into jewelry, then you got into sports.
00:24:24
Speaker
Alliance ensures 100% of the cricket played in the subcontinent today. But what part of it do you show? That the revenue from ticket sales or what? Everything. Revenue from ticket sales, revenue from sponsors, revenue from advertisers on your broadcasting. It's a perishable commodity, right? So if you're watching a 2020 game,
00:24:47
Speaker
You have 40 overs and you have ads to show between those 40 overs. And that ad revenue is what we would ensure if that 40 overs would get curtailed because nobody wants to show an ad when the ball is not live.
Exploring Specialty Insurance Areas
00:25:02
Speaker
You can't show ads between when there is cover on the field and it is raining, for example. So you would cover loss of revenue, you would cover
00:25:14
Speaker
a player injuries, you would cover sponsorship loss, you would cover ticketing revenue loss, you would cover various things. And for movies, what would you cover? Like again, ticket collection. Movies is more complex, right? You can just imagine how many characters have to be on a screen, which we see, but on the shooting floor, you have an illicitness of a star, you could have a camera which is malfunctioning,
00:25:42
Speaker
you could have a fire to a set or you could have a ride going on or you could have a flight which has been missed by somebody or you could have
00:25:53
Speaker
Somebody is suing you or you are offending a certain religious sentiment or you are, you know, offending a product. Like I remember we were on a legal claim when, you know, Jandubam had sued one of the actresses on a song of Salman Khan, you know. So it's various things. It's endless what you can imagine. Everything that you can wildly imagine can go wrong.
00:26:23
Speaker
does go wrong. It could be anything and we would ensure it.
00:26:31
Speaker
I imagine these contracts must be extremely complex, right? You would need to document all types of risk in it, and this is covered, this is covered, this is covered, and so on. And Alliance awarded these contracts. So we created these contracts. They were not available in the open market. We awarded it. We sat with clients, understood the exposures, went to shooting flows, saw how a movie is shot, all the things that could possibly go wrong.
00:26:59
Speaker
See, we are risk managers, so we may not know how to make a movie, but we can envisage all that can go wrong in making one. And then we converted that into a document which insurers would be happy to issue. So yeah, we've done a lot of legwork there. Amazing. And the insurers who agreed, they were like, what, private players, government players? Well, to start with those government players, they had a larger balance sheet to write the risk.
00:27:28
Speaker
And, you know, private players would look at what's my quarterly profit. At least back then, no longer. I think they have a larger long-tail view today, but back then they would be, it's new business, private sectors just opened up. People are not as experiment oriented. So you needed somebody who would back you, you know, and believe in your strategy.
00:27:54
Speaker
Okay. Amazing. And so by, you said movies, you said sports. What else did you get into in terms of specialty insurance? Diamonds, jewelry, cash, movements, bullion, aviation, agriculture, aquaculture. Diamond jewelry would be like theft insurance.
00:28:17
Speaker
Yeah, theft insurance and even working upon, right? The rough diamond gets worked upon pressure. It could burst. There are various risks to it. Now we cover computer crimes there because everything is electronically managed. It's not physical diamonds anymore. Shipments, you're moving it from Surat to Mumbai to Antwerp. Flight risks, customs risks, various things.
00:28:48
Speaker
Got it. So by 2010-11, what kind of headcount were you at? What kind of premiums were you collecting? I think by 2010-11, we were almost 100 crore premium. OK. Amazing. Yeah, we were.
00:29:12
Speaker
We would be close to around 75 people. Okay. And when did you do your first pandemic? I think about 2015 is when you did your first pandemics, right? Yeah. 14, 15 years. Because we started coming at a lot of pressure from the big boys. Who are the big boys?
00:29:32
Speaker
Not global multinational brokers who set up shops in India. You know, they begin New York, they begin London, but now they've entered India. A lot of captive players come here.
00:29:45
Speaker
Yeah, aeons, marshes, villages of the world. Okay. Then a lot of multinationals, a lot of globe captive brokers started coming up like, you know, reliance, Mahindra, Tata, Aditya Birla. So, you know, a captive broker is essentially like catering to all the HRSDs of that conglomerate.
00:30:06
Speaker
That's what it means. Of the conglomerate, but also they would start looking at things outside, right? Because they have a larger base, they have deeper pockets. So we realized that we are playing a game of not just catering to our clients, but we are also playing a game of do we have the ability to invest in the future.
00:30:31
Speaker
which could be either technology, either people, either geographies, either sectors. It's no longer about, I think it was very clear by 14-15 that this is not about how good you are.
00:30:50
Speaker
It is how strong you are. It's about the muscle play because you would be good at something, but your competitor could convince an insurer not to back you because he or she is parking larger business.
00:31:03
Speaker
You could be good at something, but you still need a minimum income to survive while competition would say, listen, I don't want to make money for 12 months, but I want to eat into their business. So it no longer became till 14, 15. It was all about, you know, you're a startup. You are here to service
Securing Private Equity and Scaling Operations
00:31:20
Speaker
your clients. Your clients love you. You are growing steadily and you are kind of not
00:31:26
Speaker
or stamp standing on other people's feet but by 1415 you started rubbing shoulders with a lot of big boys maybe not running rubbing shoulders but you were rubbing your knees let's put it that way you are not still at their shoulder height but they started feeling the threat.
00:31:46
Speaker
who is this non-funded local you know this bunch of kids who are trying to you know do this. So, you would start they would start they would they would switch on the heat on you like it would happen on any market. And if you have to counter this heat and you have to go and fulfill your
00:32:15
Speaker
We realized capital was needed.
00:32:20
Speaker
And, uh, we didn't want to be part of any large corporate group or we did not want to be a subsidiary of a larger broker. Our independence was very important to us. So that's when we thought private equity is the right road for us to walk on. And it's always good to know, you know, what you are being, what you are worth back then. Uh, so, uh, yeah, so that's when we did a first race.
00:32:50
Speaker
I have not really heard of brokerage business being able to raise private equitably. Yeah, we were the first. We were the first in 14-15 and we showed to the industry it's possible.
00:33:02
Speaker
I mean, you know, brokerage businesses typically, I mean, you know, there's in like most, mostly the funding goes to like a product of the which has IP and it has sticky customers and reputable revenues and so on and so forth.
00:33:23
Speaker
For a brokerage business, I mean, the case for external funding is a little weaker, right? Because you are reliant on the supplier with the manufacturer of insurance, in a way. It wasn't easy, Akshay, to convince, I must have met, in 14-15, I must have met more than 50 private equity funds. And 49 of them wrote us off.
00:33:48
Speaker
And the reason was this only that I mean funding a brokerage is like not really. No, the reason for them was you are too small and we are not confident if you can scale. Okay. How will we get an exit?
00:34:05
Speaker
And of course, the reason is that you do not have your own capacity. And there are 350 to 400 brokers back then. And you are not in the top 100 also. So why should we back you? You spoke of the competition from other brokers.
00:34:35
Speaker
So they can pass on their brokerage as additional discount to the customers. Is that one of the ways in which they can use capital to outcompete? Yeah, they would, they would tell the insurer, give me a price without brokerage. Ah, okay. And so then nobody else can match that price. So that's how they can use capital too. Or, or, or they would also say, listen, we will do valuation for you. We will do risk management studies for you. We will do internal audit gaps for you.
00:35:04
Speaker
We will deploy an implant for you. It would not make business sense, but in 14-15, a lot of this was happening. So, we were genuinely feeling the heat.
00:35:23
Speaker
ah in 14 15 and ah. So, 2008 was when we we first felt the heat and 2014 was second time when we started feeling the heat because of different reasons to 2008 ah, but yeah it it it was not easy. And what was your head count than the pre-grip collected by 14 15.
00:35:50
Speaker
Oh, we were a little above 100 people. And our premiums would have been around 200 to 250. And how much of this came from speciality? How much from corporate?
00:36:11
Speaker
I think 60-65% came from speciality and 40 odd percent came from public. So you raised two rounds right from the same PE fund. I guess after the first round they saw like the numbers moving up or they saw proof of investment showing results.
00:36:30
Speaker
So we did not take the second round. We took the first round and we refused the second round because we realized that you don't need to have a nuclear weapon to fire. You just need to show to the world you have one. And that's good enough. So the very fact market realized that we are funded.
00:36:52
Speaker
they realized they can no longer play the capital game with us. So we kind of countered their ability to, because then they will need to keep losing money on us for the next four, five, seven years, right? Because that mandate nobody had. So we didn't need to raise the second round. And yeah, so the first round was raised and I think more than the money, it gave us the confidence
00:37:20
Speaker
as an organization that if outside world thinks we are valuable then why are we not pressing the accelerator and that's when we truly started expanding without thinking whether will we have the money to pay salaries tomorrow. You had the capital question to allow you to not worry about that. And I give you a secret Akshay.
00:37:50
Speaker
Still date, we have not rupees, one rupee of the capital that we raised. Wow. Okay. It was just a confidence builder that, you know, go ahead, do it. If it does not happen, you have a safety net, but the very fact that you are confident to go and do it, we never needed that capital. Amazing. You raised about $10 million, I guess. No, around, around six million. Six million. Okay. Got it. Okay. Yeah. Amazing. Amazing.
00:38:19
Speaker
You know, so when you put your foot on the pedal, you must have had to learn a different set of, you know, understanding how to scale, like, you know, one is that zero to one journey, then there is a one to 100 journey, 100,000 journey. So your own understanding and learnings must have come along the way. Can you share some of those?
00:38:41
Speaker
You know, the zero to one journey is an easier journey, I believe, because it is same for everybody. You know, everybody needs to sweat out. Everybody needs to make personal compromises. Everybody needs to put personal asset and capital on the line. And you are high on vision and inspiration and motivation. The one to a hundred journey is more difficult.
00:39:08
Speaker
and it requires because 0 to 1 are put karru. 1 to 100 are put nikar saktiv. You need to rely on your teams, you need to attract talent, you need to rely on systems, you need to rely on the capital that you are infusing, you need to rely on the infrastructure, you need to rely on delivery capabilities, you need to rely on
00:39:33
Speaker
the overall market conditions. You need to rely on your carriers, your partners, your customers' ability to have faith in you because you're changing gears of the size of your customers as well. So there it is not just if you are Superman.
00:39:53
Speaker
You need a bunch of Avengers there. You can't fight it alone. So, you know, that's a more difficult journey and it all starts by having a great team and they buying your vision. If people are working with you for salaries alone, you can never get the best out of them because they'll always be somebody ready to pay them a little extra.
00:40:20
Speaker
But if people are working towards a common vision, then they will also take pay cuts. They will also not draw salaries and they will also reap benefits of the group because then they are truly working like entrepreneurs and not working like employees. And that's always been our culture that, you know, let's create more entrepreneurship within the ecosystem. Let's create more sense of ownership within the ecosystem.
00:40:50
Speaker
Let us empower people to take decisions. But the important part is that 8 are right. You are better of having 2 wrong and 8 right rather than somebody not taking any decisions and coming to you for everything.
00:41:09
Speaker
So, you know, I think that is where the zero to one journey played out very well for us because from a 150, 200 crore under management in five years to make it 10X is where, you know, the accelerator was pressed. And I think the most important thing is to believe in people.
00:41:37
Speaker
People forget that the only magic that really exists in this world is within humans. It does not exist in the Harry Potter world. It does not exist anywhere else. It only exists within our own ecosystem. And to truly bring out the magic, you need to deploy faith into people. And if you give them the faith, they will feel more responsible. They will feel more capable.
00:42:04
Speaker
and they will bring the best out of themselves. And that's what magic is for me. Amazing, amazing. Yeah, the Enix growth in the last five, six years is phenomenal.
Company Culture and Performance
00:42:17
Speaker
You know, I'm assuming that insurance brokerage would be a lot like what you see in movies about Wall Street, Wall Street brokerages, very high pressure environment, always pressure to sell, sell, sell. How do you build that kind of a performance culture? Because, you know, you really need a very high
00:42:38
Speaker
orientation towards meeting targets, chasing targets and so on in people. How do you build that kind of a culture? How do you build that kind of a team which is constantly chasing targets? It's very simple. I don't know why people complicate it. Everybody is clear of what they want to achieve. But nobody wants to define what they want to share with your teams.
00:43:02
Speaker
It's so complicated when I look at my peers that, you know, uh, your rating comes in a particular manner, company performance, team performance. I'm saying it's very clear, right? If you are creating a concept of entrepreneurship, then you define to your people, this is what I want boss from you. And you achieve this, and this is the minimum that you get from us. Whether the company is making money or losing money.
00:43:29
Speaker
Why should he or she pay a price for his colleague not delivering? As long as you define that clearly and you define it that the only way for you to grow in this ecosystem is not because your boss loves you. It's because your performance is standing on its own seat and that's when your culture is defined.
00:43:53
Speaker
But people don't want to do this. People want to keep control over his or her faith at the end of the year. People want to complicate it. People want to make themselves important, rather than systems and processes being more important. They want how, what they feel about. It's not about what Akhilsi is about Akshay. It's about what Akshay is delivering. And that changes the culture.
00:44:21
Speaker
And then you may have to say sorry to people at the end of the year because they've just not done it. And you will have to reward people who have done it. So essentially, your culture is if you go and achieve good numbers, you will take home good money.
00:44:46
Speaker
Not just good numbers. I'm saying whatever is a target that is defined. It could be good numbers. It could be positive feedbacks that we want from our customers. It is solving certain critical issues. It is about how collaborative you are because you're operating across today.
00:45:02
Speaker
16 cities, you are operating on 10 speciality lines, you are operating between 5 practices, you are operating on speciality, reinsurance, government business, insurance, corporate solution, SME. It is not possible that you are operating going to be in straight jacketed approach, you will have overlaps, you will have collaboration, you will have how are you, you know,
00:45:28
Speaker
delivering on all these fronts, but you define it. I'm saying don't keep it too whims and fancies of individuals. You define it in a holistic manner, whatever you want to achieve. You know, I'm saying let any organization will have different objectives.
00:45:46
Speaker
We may have an objective of top line and not bottom line at some time. At some time, we may have an objective of bottom line and we don't care about top line. Some teams, we will have an objective of only ramping up. Whether we're doing business or not, we want to create a 15-member team in this market. And we want to be quoting on every possible risk, whether we convert or not. Every unit, every geography, every team within the organization will not necessarily have the same objective to achieve in that particular year.
00:46:19
Speaker
Each unit and each team, each geography needs to be defined what is expected from them. And you also define if we deliver this, this is what we are happy to ensure that as an entrepreneur, this is your share of the profits. Okay. And don't link it to, don't link it to, you know, I don't think you have this and don't link it to subjective thing because it has to be measurable. Right. Amazing. Amazing.
00:46:46
Speaker
I'm guessing a large part of your role is this, to set targets so that everybody is aligned. You know, a large part of my role today is, you know, I divide my time. I like to divide my time into the following four buckets. One, I like to spend time with my team.
00:47:10
Speaker
to ensure that they're on track, they're aligned, we're reviewing them, we're understanding from them, we're solving problems on the go, we're strategizing for the future, and we're investing for the future. That's one part of the bucket.
00:47:24
Speaker
The second part of the bucket is we are constantly meeting new talent, looking at new opportunities, looking at new businesses, new lines of businesses, new capacities. Our startup DNA will never end. So we will keep creating startups within our ecosystem.
00:47:46
Speaker
a team that we recently created on aquaculture where you are ensuring prawns and shrimps of their growth. We recently created a team which is looking at only renewable energy.
00:48:01
Speaker
There's a massive boost to renewable energy by the government. But what is renewable energy working on? It's working on two things. You have a government contract, buy it at a particular price, and you have a financer who is funding you to deploy that capital on the pretext that you will generate so much energy. And what are you generating energy from? Sunlight and wind. Has anybody thought of lack of sun and lack of wind?
00:48:27
Speaker
So, we have a team that we have created what happens if the sun does not shine as bright as it should or what happens the wind does not move at the speed at which it should then you lose money. So, we will keep innovating and investing whether it is talent, sector, tech, geography whatever. So, the second part of my time goes in identifying futuristic opportunities to invest.
00:48:53
Speaker
The third of my bucket goes in meeting clients. You should never be away from your customers. You should always ensure that you're meeting some of your critical relationships just to constantly give them comfort. You are also meeting new relationships to give them the confidence. But this balance of comfort and confidence is very important.
00:49:18
Speaker
Existing clients need comfort, new clients need confidence. And it's important to lead from the front, you know. So, you constantly keep demonstrating the boss hunting as you are there, farming as you are there, as in when you have the time. And the fourth part of my bucket, you know, kind of goes in
00:49:41
Speaker
The overall firefighting, which is regulatory firefighting, insurance companies' relationships, investor relationships, compliance has become a very important aspect of the business. Analyzing tech, whether your current tech stack is good enough, you need to upgrade it.
00:50:01
Speaker
And how do you deploy that upgrade? So I would not typically call it firefighting, but it would be analyzing and reanalyzing potential threats and potential relationships, which is not restricted to your team and clients. It could be the other stakeholders. So this is typically where I spend my time. OK, got it. Amazing.
00:50:30
Speaker
What is the organization structured like? You have 500 people. So each practice has a head. So you will have a practice CEO. It's then these practice CEOs, they are not working for you. That's another cultural change you need to have. You are working for them. You are working for your speciality CEO.
00:51:00
Speaker
You are working for your corporate CEO that, you know, how can I help you expand better? Can I help you do this better? You are working for your elephant CEO that, you know, what next thing you want to do? What is your strategy? Where are you getting stuff? The minute you think they are working for you, that's a different culture versus you are working for them. That's a different culture. So I believe in the second part. I don't think they are working for me. I think I'm working for them.
00:51:26
Speaker
And I am responsible towards helping them, guiding them, supporting them, solving their challenges, if any, deploying capital into them like an investor.
00:51:38
Speaker
That's the way I like to work, you know, as an organization. And do you have like centralized shared functions or like each CEO has their own functions? No, no, no. So you would have shared services because you need to bring efficiency of scale. You need to bring operating leverage.
00:52:03
Speaker
So, you would have common functions and you would have two common functions, one is your business support and one is non-business support. Non-business support would be HR, finance, legal, recruitment team, compliance, branding, marketing, so on and so forth.
00:52:22
Speaker
Your business support would be your underwriting teams, your claims teams, your health. Health is a large part of our business and a massive focus area. Your health delivery team, your wellness teams like Dr. Ron calls, health checkups, wellness.
00:52:39
Speaker
so on and so forth. Your tech team is a common team, which will go and support with different businesses. So today, you know, a lot of jewelry, which people buy, they get auto insurance alliances sitting behind those dwellers. So you will have a tech team, which will work with the jewelry team that, okay, let me get you a tech where every time a bill is issued for a bangle insurance is also issued in the same breath. So you need to have tech integration with your billing system. So you have a lot of common support team because you can't expect these business CEOs to be good at everything.
00:53:08
Speaker
They are good at business, they are good at managing people, but they need the right kind of ecosystem to support them as well, you know. And yeah, and that's when they bring the scale right. So yeah, so that's the way we work.
00:53:28
Speaker
Well, what do you do in your health business?
Innovations with Elephant.in and Fintech Synergies
00:53:31
Speaker
Is it like the employee health insurance for corporates? That's part of the corporate business? Or do you also have like a direct-group consumer health business?
00:53:40
Speaker
Yeah, so we have two businesses now. Alliance does the corporate business. So we obviously, as I said, we work with more than 3,000 corporates. We insure more than 10,000 lives as health insurance for corporate employees. But we realize that those corporate employees are not treated with the same corporate muscle power for their individual needs.
00:54:09
Speaker
So let's take a situation of you have a large corporate with 10,000 employees. The corporate has a lot of muscle to go bring the best for their balance sheet insurances or the premium that they pay. But imagine Akshay was working for that large corporate for his individual health insurance or life insurance or home insurance or travel insurance or his bike insurance for that matter.
00:54:34
Speaker
He is still dependent on an agent or a bank or a channel or an insurance platform which is treating him like the way the whole world is being treated. So the corporate superpower or the corporate muscle does not get transformed to the employee for their own insurance. So we saw this as a massive gap. We saw this as a massive gap from an Akshay point of view.
00:55:03
Speaker
And we saw it as a massive opportunity from a business point of view. And that is where Elephant was born. So Elephant is an insurance advisor to corporate employees. And it negotiates deals on the strength of the corporate and transforms it down to the individual. So that individual will get the deal in terms of price, in terms of cover, in terms of claim service.
00:55:33
Speaker
which he cannot get in the open market because he is working for that corporate. So, his corporate email id is his entry password to unlock the world of elephant.
00:55:52
Speaker
Would it not make sense for you to negotiate as an entire platform? You negotiate for... No, no. Negotiate as an entire platform. Okay. So as an elephant, you can go and get special... Yes. Elephant, which has access to 3000 customers of Alliance. It has a separate sales team, which goes and attacks non-Alliance customers. Has access to, say, a crore corporate employees.
00:56:19
Speaker
and it goes to the markets, negotiates deals and offers it to these corporate employees. But sometimes, certain corporates may want a very unique cover. Say, they may say, listen, we are providing a 10 lakh rupee health insurance to all our employees. We want you to get us a top of another 20 lakhs, optional to our employees, in excess of 10 lakhs. Now, everybody may not have a 10 lakh cover, right?
00:56:48
Speaker
So then we would go and negotiate that for that corporate and that deal gets unlocked only on his email ID. Okay. Okay. Okay. So our AI has an ability to offer you depending on what corporate email ID use you're coming with and offer you a deal, which is meant for you. Right. So maybe like a reliance employee might see more deals than somebody from a smaller company.
00:57:17
Speaker
No, not necessarily it could be and we have the ability to offer that same deal to another company also if there is a fitment. So the deals that get negotiated go sit in a common bank and depending on our AI's ability to identify what you actually need gets offered to you.
00:57:35
Speaker
Okay. Okay. Got it. Got it. Okay. So essentially this is a way to compete with someone like a policy bizarre without the Casper because absolutely, absolutely. I must have loved this business because we are not burning cash to acquire customers. Right. Yeah. Because you acquire one corporate that gives you anywhere from 500 to 5,000 customers per corporate acquired.
00:58:04
Speaker
Yeah, but at the same time, we don't even wish to go to B2C. We don't want to be a B2C player. That is not the objective of Allison. We want to be a B2B2E player. That is business to business to employees. Okay. Okay. Okay. Fascinating. And when did you launch elephant? We launched, we actually thought of this during COVID.
00:58:28
Speaker
And it's been operational since you know, two entire years we've completed two years of operational rollout. It started by creating the tech, the concept, identifying capital to deploy it.
00:58:46
Speaker
It will be a burn business for some time because you're investing into people, tech, journey, products, distribution, so on and so forth. But yeah, so it's just a two-year-old operational VB. And what is the, like some numbers, some metrics, what is the premium collected? It would do around 100 crores in premium. Okay. Okay. So very, very early days, basically. It's still in the zero towards the peak.
00:59:17
Speaker
Absolutely. I'm reliving my zero debt. How do you ensure that the employees are aware that elephant exists? I mean, if I'm working in a large conglomerate, I may not even know that I go to elephant. You know, how do you ensure adoption? I mean, one is you do a tie up with the company and make it available, but how do you take it from being available to being used?
00:59:46
Speaker
I think that's a great question. I think it's very important to be there when the employee needs it. Because employment needed only once or twice a year for either renewing or needing to buy. So you are dependent on HR. And HR, I must say, is a community which is very happy to ensure that their employees are there. So you are one dependent on HR communication.
01:00:15
Speaker
to you know which company you are targeting so you can use platforms like LinkedIn very effectively.
01:00:21
Speaker
Um, three, you are also, you can use onsite, uh, activations, gamifications, uh, various things to ensure those employees are aware. Um, so yeah, these are some of the tools you use. And, uh, I think a word of mouth also plays a very important role. So say you have, uh, if you're in Reliance and say you have a hundred customers from Reliance.
01:00:48
Speaker
you persuade in various ways to those hundred people for them to communicate it into their larger group rather than just depending on digital reach out or HR reach out. And you are obviously you will need to have a larger bank
01:01:09
Speaker
and we will need more capital than which is what we are in the middle of raise. We are in the middle of our second raise right now, to raise more capital to ensure we have ability and capital to deploy. Your last round is still unutilized. Why not just use that? You want to keep that as a margin of safety.
01:01:33
Speaker
The last sound is insignificant in our scale too. 6 million dollars is not significant money for the scale at which we are operating today. And if you have to have a larger elephant reach out to corporate India, you will need anything between 50 to 20 million extra.
01:01:59
Speaker
You know, this health insurance space is a pretty crowded space. There are at least four well-funded companies operating here and a lot of other not so well-funded companies.
01:02:11
Speaker
So, and I guess the approach for most of them is somewhat similar where they will get a company on, they will tell the company that now all your employees have an app where they can manage their health insurance, which is entitled to them. And then they can also buy add-ons through the app if they want. And then the app will also give them access to like doctor's consultations or whatever, like gym and wellness sessions and so on and so forth.
01:02:36
Speaker
So how are you going to compete with them? Because it seems like the market is very large. It's a massive market. None of them have the muscle of alliance and the volume of alliance. So our ability to negotiate deals with insurers, our ability to service, you name
01:03:00
Speaker
Any sector top 50 clients in view would be ensuring health of at least 10 of those top 15 in every sector for their corporate employees, whether it is banks, NBFCs, movie channels, large manufacturing, IT companies, insurance companies, infra companies, power companies.
01:03:21
Speaker
So, the scale at which we are servicing these employees is very different than the scale at which these in short takes are servicing and as I said it's a massive market heavily under penetrated. I think everybody has a place in this market and our focus will remain
01:03:48
Speaker
penetrating, creating value. And we believe because of our volume and because of our pedigree, we have far more larger volume to drive and far more larger value to create. When somebody's buying health insurance through Alliance, do they get something like an app or something like that? Like what do they get?
01:04:11
Speaker
Of course, it's called elephant benefits. Okay. That is elephant itself? That's like a separate. No, it's just a health app. Okay. It allows them to see a network of hospitals. It allows them to claim reimbursements, track their claims, go ahead into free doctor consultation, get medicine discounts, gamify experience between say finance versus sales. It allows them
01:04:40
Speaker
ability to top up optional plans, it allows them flexi benefits that the HR can construct, it allows them to upload their claim documents, it allows them to reach out to various support ecosystems, raters, digital communication, the works. So why not have that only as your elephanta?
01:05:09
Speaker
Why a separator? Yeah, because believe there are three businesses that we are running. One is the elephant business, which is a voluntary insurance not restricted to health. It could be motor, it could be various things. Then you have an alliance business, which is the B2B business and they both are catering to corporate employees.
01:05:38
Speaker
And they both need a common platform to service and meet those objectives. And that is what Elephant Benefits does, because Elephant Benefits is not just focusing on health insurance. Alliance as an organization is not just doing health insurance.
01:05:57
Speaker
So we need to have a different platform that allows employees or health customers to get serviced in a very focused manner. There's no point having a two-wheeler insurance on your health plan. It makes sense to have a top-up plan or a life plan or a cancer for women plan.
01:06:19
Speaker
But you can't have car insurance plan dates. There's no pittment. And why would you confuse your buyers? Why would you confuse your customers?
01:06:30
Speaker
Got it. A bit like how Blinkit is a separate app, Zomato is a separate app. Absolutely. See, just because I need to buy something does not mean that it is available everywhere, whether there's a fitment or not.
01:06:53
Speaker
You can't you can't have a combination of products that is either the customer or your target audience can't relate to or they feel they are the services are coming across as somebody trying to sell them something. Ah it there has to be a natural fitment and that natural fitment may not be available ah if you bring everything together.
01:07:19
Speaker
Got it. But okay. Do you also see a, like, you know, a fintech play for elephant in the sense that once you're selling insurance, you could also sell mutual fund investment. The answer is, uh, there is synergy. Uh, I feel the first synergy is to fund the insurance premium as a loan like a BMP. I see that installment plan.
01:07:51
Speaker
So, you know you are buying a life cover and your premium is 40,000 rupees and you can.
01:07:57
Speaker
put that on an installment platform. I see that as the first synergy ah and then other things you know. So, yes if the to answer your question yes there is you have access to market which can obviously ah do that, but ah I think again the fitment it is all about fitment right. You you you want to be known as an ah an expert in a certain area rather than trying to do everything.
01:08:24
Speaker
Got it. Tell me about something which you regret something which you wish you had done in the last 20 years of running alliance celebrate. I feel I should have started expansion in 2010 press the accelerator and not waited for 5 years. Right yeah that confidence booster PE funding was not needed. Yeah it was not needed it was maybe it was
01:08:55
Speaker
you know, circumstances, age, lack of experience, maybe the environment which you are operating, meeting more of people who are operating, you know, in a safe zone, working somewhere. I think I always had a larger appetite for risk, which I was aware of, but I should have not curtailed my natural instinct.
01:09:25
Speaker
then Alliance would have been possibly at a far more larger platform today.
Advice for Aspiring Entrepreneurs
01:09:33
Speaker
My last question to you, what advice would you like to give to young aspiring founders? You just have one life. Go for it. Don't hold back your fire in the belly and
01:09:56
Speaker
You should be aggressive in what you want to achieve. Build a team with entrepreneurship background and don't think of it that you are the boss and they are working for you. Think of it that you are working for those entrepreneurs and that will change the entire outlook. Amazing. Cool. I have done with my questions. Is there any question you recommend I ask?
01:10:27
Speaker
No, I think you've covered all of it. Okay. And that brings us to the end of this conversation. I want to ask you for a favor now. Did you like listening to the show? I'd love to hear your feedback about it. Do you have your own startup ideas? I'd love to hear them. Do you have questions for any of the guests that you heard about in the show? I'd love to get your questions and pass them on to the guests. Write to me at ad at the podium dot in. That's ad at T H E P O D I U M dot in.