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The Bharat way of insurance distribution | Balachander Sekhar @ RenewBuy
595 Plays2 years ago
Insurance is an industry where people used to rely on agents to buy policies. But then came PolicyBazaar, which went the Silicon Valley way and got rid of agents. Enter RenewBuy, which took the "Made for Bharat" approach and respected the agents' spirit of entrepreneurship by empowering them. In this conversation, Balachander talks about his decades-long journey in the insurance industry and the unique choices they made while building RenewBuy.
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Transcript
Paths to Industry Disruption
00:00:00
Speaker
Hi everybody, I am Bala. I am the founder and CEO of Renupai. We are one of the fastest growing InsureTech platforms.
00:00:20
Speaker
After interviewing hundreds of founders, we have seen that founders tend to take one of two paths when it comes to disrupting large industries. The first path is the Silicon Valley Path, in which you cut out the middlemen and sell directly to consumers. And the second is the Made for Bharat Path, in which you respect the middlemen for their entrepreneurial spirit and empower them.
00:00:39
Speaker
If you take the example of retail, Amazon and Flipkart are cutting out the middlemen by directly selling to consumers. And on the other hand, companies like Udan and Jumbo Tail are empowering the middlemen, which is the Kirana stores. Similarly, in the insurance industry, the Silicon Valley path was the one followed by Policy Bazaar, which eliminated the insurance agent and Renew Buy is taking the made-for-Bharat path by respecting insurance agents for their entrepreneurial spirit and empowering them.
00:01:06
Speaker
In this episode of the Founder Thesis Podcast, Bharat Chandra Shekhar, the founder of RenewBuy, takes your host Akshay Dutt through his multi-decade journey in insurance industry and talks about the unique choices they made while building RenewBuy, which has raised more than $100 million till date from marquee investors. Stay tuned and subscribe to the Founder Thesis Podcast on any audio streaming platform to learn about building large businesses for Bharat.
Bala's Educational Journey
00:01:38
Speaker
I'm a South Indian Tamilian and I was born in Trichy, but actually I grew all my life up in Baroda, in Gujarat. I come from an extremely simple middle class upbringing. Since I grew up in Gujarat, I used to keep having these conversations with my friends saying, end of the day, you will land up working for somebody like me. And I had to see the world and be able to explore and do it on my own.
00:02:05
Speaker
So somewhere around my 10th, I started getting serious about my life. I went on to become an NTS scholar. So subsequently, everything in my life got paid through that scholarship. I then managed to get into IIT. IIT Bombay, four years of engineering, was an incredible experience. So it's two thirds of my batch in IIT at that time pretty much went abroad.
00:02:33
Speaker
And I myself had scholarships from three or four universities, good universities in the US. And I actually specialized in civil engineering. And around those subjects, I managed to secure these admissions and scholarships. And it would have been a fairly well laid out path, but something
00:02:55
Speaker
struck for me. Then I figured that I would rather learn the aspects of business and management and then go into one of the best management schools in India, which is the IAM with IAM Calcutta. So that's really my journey. So after
From Engineering to Business
00:03:10
Speaker
Calcutta
00:03:10
Speaker
campus, I got lucky, got a great placement with Smithline Beach, which is today called GSK, but the original Horlicks, Boost, Croson brands, which they owned. And of course, the company and the brands have changed hands today. But I can tell you it was one of the most prestigious marketing jobs to get. I got selected to join the brand team and eventually used to run the Croson brand as the brand manager.
00:03:38
Speaker
and I still keep saying FMCG is the best place to start a career. After spending 3-4 years, I guess the entrepreneurial bug was so high. That was the dot-com era and I quit my
00:03:53
Speaker
fantastic job, everything going good. And everybody's saying, are you mad? And then started my own dot com. I don't even want to talk much about it because it was such a stupid idea. There was no business plan. Actually, there was no business. It was just one crazy thought and idea and creating a city's portal where you could list various services and use the net. The obvious question was, OK, how is this ever going to make money? And I was like,
00:04:23
Speaker
Wow, why is that important? And believe you me, in six months, actually I had no money to think about, but I was truly, truly bust. Now also the important learning there is, it's also sometimes important to call a spade a spade and obviously quickly unbound from it.
00:04:41
Speaker
Unfortunately, the pendulum kind of swung the other way and I said, okay, now which is the most safest career to take?
Banking Successes at ABN AMRO
00:04:48
Speaker
So luckily there was a great opportunity to join a bank that was ABN AMRO. And the best part was banking was also moving from being largely a corporate business and corporate banking to creating retail banking and Citibank, ABN, wherever, at the forefront, trying to productize and create a more consumer led thinking and so on. So it fitted.
00:05:11
Speaker
perfectly and the best part was they had the insurance business had just opened up in 2001 and first time they allowed privatization.
00:05:23
Speaker
And banks were also allowed to sell insurance, and that became a project which incidentally no existing bank guy wanted to take up because they thought it's a punishment posting. And so they said, I don't know if it's true or not.
00:05:42
Speaker
So for me, banking was new and so was insurance. So I said, what the hell? It's okay. So let me give it a shot. And early days, I cannot begin to tell you how crazy it was. We had to literally write out how it will work. I mean, funny, there was actually a time when we were figuring this bank assurance, which is such a success model today. We were wondering, should it have a C or a K in the spelling?
00:06:08
Speaker
So, things like that and many experiments I managed to do. Good part was I had a very supportive leadership team who allowed me to try like many things that we tried fail but the lesson here is that when intuitively and inherently you
00:06:25
Speaker
I think that something as a value proposition should work. I think you should never stop trying because many times you don't necessarily get it right first, but that should not deter somebody from saying, okay, let me try it another way. Let me, let me change something. Let me do this. And I used to get frustrated in the first year or so.
00:06:48
Speaker
Believe you mean the third or fourth year of my stint there, I was delivering 33% of the retail banking's profits through insurance sales. So we're not manufacturing the insurance. We were tied up as a distributor to distribute one life insurance company and one GI company.
00:07:08
Speaker
And what you needed to do was create an environment and the workflow to facilitate ability to cross sell and pitch insurance to the various customer segments. So at a broad level strategically, you needed to map which product.
00:07:24
Speaker
would work well with each customer segment. Bank has credit card customers, savings account customers, and then high net worth customers on the other end of the spectrum. And each of them had very, very different needs, whether it was health or life or motor.
00:07:40
Speaker
Plus we had a huge auto loan book, so we used to embed the motor insurance through that. The role also required you to, and the best part was to create some form of engineering, which allowed a frictionless process. And essentially, how do you embed some of the products with the bank's products? And that was one, resulted in one of the biggest successes for AB&M.
00:08:05
Speaker
So to give you an example, one of the most successful products, which I still feel very proud of, we had a child plan there called Treasure Account. It was a child account. So what we basically did was created a product called Treasure Plus, which essentially meant that you could put 1000 rupees or 2000 rupees or 3000 rupees a month and put it into this life insurance saving plan, which accumulated some of money for your child. And we just simply said,
00:08:34
Speaker
I don't know what to expect. And that really works, right? And it's a great product at the end of the day because we keep talking about, I want to send my kid here. I want to do that. But end of the day, you don't force yourself to systematically save. And that's exactly what we landed up doing. And I think it was a, it just hit the ball out of the park.
00:08:59
Speaker
So that was the early days in the Caribbean.
Foundations for Entrepreneurship
00:09:02
Speaker
I subsequently moved to American Express where I got a bigger role. It's a bigger company and I used to also manage wealth management.
00:09:11
Speaker
This was when American Express still had retail banking in India. Yes, they had retail banking and it was a bank and a card company. And like the other soulmate that happened in my life was my current co-founder in Ranupa, who actually joined me in Amex from ICSA potential life insurance. And so we've been together
00:09:35
Speaker
now 17 years and both our wives clearly think that perhaps they are not the first love. So, it's a very cherished relationship and obviously not built on simply agreeing to each other. We didn't last much, both of us, because within a year or two, we just completely, what I call
00:10:02
Speaker
maxed out everything that is possible. It's a small franchise with typically a very high net worth.
Challenges in Indian Insurance Market
00:10:08
Speaker
I must tell you, for anybody who's listening here, it's the best place I have ever worked in. It's one of the most employable trade organizations, great culture, great values. But when we started Renupai and around that time,
00:10:24
Speaker
What really moves me and makes me work harder in this place is the fact that even today, not more than 70 to 80 million Indians have some form of insurance. And believe you me, this is the segment which actually can afford to
00:10:42
Speaker
pay their own hospital bills or even a claim. These are the guys who actually have the insurance and actually the people who need it possibly can afford to pay a little premium. They don't have it. I'll give you some stats out of what we understand is there is at least
00:11:00
Speaker
3 lakh crores of hospital expenses that the country typically incurs. I may be a little dated, not exact, on the numbers, and hardly 40-50,000 of that is supported by the government infrastructure through their own hospitals where free treatments are done, because India is both public and private.
00:11:21
Speaker
And the insurance industry at best supports maybe 70, 80,000 crores of this through their premiums and claim. So that is the segment which perhaps you and I belong to. But there is one lakh 80 or one lakh 90,000 crores that is being footed by out of pocket.
00:11:40
Speaker
and think about who's this guy? This is the guy who possibly might have to put his land on, as they say, Kirvi or a mortgage or go to a money lender. There is genuinely in terms of, as they say, they take a hit in their lives and go back maybe three years, five years financially, and they have to recoup. When we come to renewable, this is one of the things we want to solve. And when we were in Amex, we had an opportunity to build a grassroots business
00:12:10
Speaker
for the largest conglomerate which is Kishambani's Reliance Industries. So we joined that setup and I joined what they were creating was a Reliance retail business and under that they wanted to create a financial services which essentially included insurance. So I and Indranil went there, I set up a broken company for them.
00:12:32
Speaker
And I can tell you in my entire professional life, that was the most incredible experience. First things first, it gave us an opportunity to engage with people like Shambhani and Manoj Modi directly. And it just gave an insight into how incredibly large their thinking process is and how they vision for the group and so on.
00:12:58
Speaker
And we created again, number of products, number of failures, number of things that work, didn't work, and eventually hit a beautiful business model. We used to sell more than a hundred thousand or one lakh policies from five, six hundred grocery stores called Relance Fresh.
00:13:20
Speaker
The simple insight is that two-wheelers, again an example of the middle India and the middle India, they only get insured when they move out of the dealership and after that nobody cares to insure them because those are the premium ones. You know, the amount of effort that one has to do to get the guy to come back into the insurance fold is so high that it's just not worth it. It was not worth it.
00:13:50
Speaker
So, we created a beautiful process to ensure the person who came to buy groceries at the store on the spot and essentially it just worked brilliantly and we had the great support of some of the best industry people. So, in this process of starting with ABN, Amex and Reliance, what landed up was we, both Indranil and I have become well known in
00:14:16
Speaker
doing innovative, disruptive things and thinking out of the box and creating great distribution ideas and product ideas and so on. Hence, there was a lot of support from the likes of ICICI Longbirds and HDFC Hergos and Bajaj and so on. And many of them today are CEOs of the best companies and they continue to actually support us.
00:14:42
Speaker
simply because I think we've always been trying to do something different, something unique and keep pushing the innovation angle. So that that was a great thing. One quick question. So in Reliance details, the cashiers were
00:14:58
Speaker
The ones who were like onboarding customers when they would buy insurance or each store had like one dedicated person to onboard. So the cashier at the till was where the premium would get collected. But we had a membership desk where the Reliance Loyalty Program was also being pitched and there was a financing program also and so insurance and so on. So that desk was essentially what was being primarily used for the whole process.
00:15:27
Speaker
So we then moved to the industry. For Indran, it was a second strand. For me, it was actually the first to join an insurance company. MetLife was a company we joined. As many may not know, it's one of the largest life insurance companies in the US and has a worldwide presence. But in India, it
00:15:46
Speaker
was struggling because unlike others, it did not have a dedicated bank tie up and it had smaller banks and an agency, but it had great products in our great company. So the biggest thing that we managed to do out there was to help forge the alliance with PNB and Punjab National Bank being at that time the second largest bank in the country.
00:16:11
Speaker
I think that was an incredible partnership. We won the relationship with 20 companies initially bidding for it. Then it was a full year long process. I cannot tell you how, and I was at the center of it.
00:16:26
Speaker
and each time the shortlist would come and we would be there and we would say woof and that just made us work harder. I think for us it became like now we have to get it and we won that relationship though that was actually the
00:16:42
Speaker
After a full year, we then realized that was the easy part because for the price you paid and based on the commercials, you had to make that relationship work. That was an incredible experience because Punjab National Bank, I don't know its current franchise today, but then had more than 5,500 branches.
00:17:04
Speaker
It was present in places where you could not have never been or may not go ever. For the next two years, we launched in 5,000 locations. I mean, it was like a treadmill. I don't think anybody took even a day off. So it was like two years of nonstop work to make sure that your products were launched and you were present in each and every nook and corner.
00:17:31
Speaker
And it's so such a powerful just because they tied up with us did not mean that they would just overnight start selling. You had the senior leader in Panjarnathal Bank said that, so we have to go down to each circle. Each circle had maybe 400 branches. So you had to go down even to the last branch manager and convince him why this is good for his customers.
00:17:55
Speaker
They always wanted to make sure they're doing the right thing for their customers. The branch manager in some of these small towns is not just a branch manager. For most people living there, he's also almost like a legal counselor, marriage counselor.
00:18:12
Speaker
The go-to person for everything. I mean, it was like, you know, so he's not a guy who's just going to listen to something because the HOC. So he was making a decision about, is this right for my customers in my town?
00:18:28
Speaker
And I love that, right? Because that builds conviction. So that's then we decided that the learnings that we had seen in Reliance, we did the excitement and also with the Punjab National Bank experience. And we took that decision in 2014 and eventually moved out in 2015 and started.
00:18:48
Speaker
If you want to sell insurance at tier 2, tier 3, tier 4 towns, I'm assuming the ticket sizes would be lower. Therefore, the commissions which you would earn as an insurance, I don't know whether it was an agency structure or a corporate broker structure would also be lower. How did you envisage making it a profitable business? Two, three things, Akshay here.
00:19:12
Speaker
Firstly, we studied multiple models in Asia. And one of the things I am firmly a strong believer in, one of the fundamental what I call thesis that Reduba has is that insurance, especially in India, is a sold category and not a bought category. So from our point of view, I think we wanted to build a very different
00:19:35
Speaker
totally tech-based business where we do not get into customer level transaction intervention. And the way to do that was through the best modeling that exists for insurance across 300 years, which is work with agents.
00:19:53
Speaker
Now, the problem that the agency business had were twofold. Firstly, it remained a domain of insurers. Only insurance companies could appoint agents. And this was true till 2015. And the second thing was that no insurance company had been able to crack the agency
00:20:17
Speaker
profitability and the agency arithmetic because actually you spend, maybe you give the agent 15% commission or something like that on your product. But most insurance companies even today are spending more than 20, 25 rupees to manage the agent by way of fixed costs.
00:20:39
Speaker
So, for every 10 to 15 agents, they have a sales manager. For the sales manager, they have a boss and then they have a physical branch.
00:20:49
Speaker
So even today, after 20 years of privatization, all insurance companies have bulk of their business coming from the top 30 cities catering to the same 70, 80 million customers. They have done, in my view, a very poor job of increasing penetration and the likes of LICs and are the only guys who have actually been able to go deep.
00:21:16
Speaker
So that's actually saying a lot about why these models are not working because of the inherent cost structure, the inherent inefficiency that they have created. So the vision of RenewBuy was to make insurance accessible and easy.
00:21:32
Speaker
to every Indian. And I keep having to figure out how I should describe myself. I just am here to make sure insurance reaches the masses. And we think we have a solution that we want your support and being able to digitize the journey with your company so that we can offer your products
Innovations at RenewBuy
00:21:53
Speaker
to our customers through our agents with our app and then we slowly started the process. We started with two-wheeler insurance, which is dear to me and something I feel so good about by saying that...
00:22:15
Speaker
I have two-wheeler insurance on the spot we are able to use my app. If something happens to him, overnight the policy takes over and his claim gets paid and he doesn't have that issue.
00:22:32
Speaker
This is possible only because of pure digital on the spot policy issuance that we have created. The agent who does this for a new buy probably makes 100 rupees, 150 rupees kind of commission. But he's able to do this in five minutes on the spot using his mobile phone.
00:22:53
Speaker
He doesn't have to go anywhere. He just has to speak to the customer on the phone or stand in front of him, punch in a few details. Within seconds, Akshay, there is a choice of about 15 to 20 insurance companies that are offered.
00:23:09
Speaker
within minutes the form or whatever the details are filled on the device itself and instantly the policy is in the inbox. So when we launched not too far away in 2015-16, 8 out of 10 people will tell you why this will not work.
00:23:24
Speaker
So, every third day I would come back and say, I have all my life savings again. This was the second innings for me. All my life savings again, back into Avenger. I was really earning a lot of money thanks to MetLife and the insurance industry really pays well. And suddenly, you know, I had a lot of money. I had a lot of money.
00:23:53
Speaker
I don't know how to say it. I don't know how to say it. I don't know how to say it.
00:24:09
Speaker
And then we basically every year there has been so much value add to the platform and the app and the technology that obviously when we started, we still had a great solution, but we have now learned. We started with two wheeler, then we went to four wheeler, then we went to commercial vehicle.
00:24:28
Speaker
Two years ago we launched health insurance and last year we also have life insurance on the platform. So today we have 42 insurance companies in our platform. We offer more than 300 products from these 42 companies across the categories of largely motor health and life.
00:24:48
Speaker
We have mainly focused on the consumer opportunity. And when we started, we had no clue about investors and all much. So some of my well-wishers and friends became as angel investors, believing in the story. And we are so thankful to all of them. And we actually raised our first institutional fund two years, two and a half years post hour. By then, the model became so successful.
00:25:15
Speaker
that he zoomed to becoming the second largest only-to-policy wizard and essentially with zero capital from, you know, or rather with some very frugal capital. Just a couple of questions I want to ask you here. What changed in 2015 that you said only insurance companies were allowed to appoint agents?
00:25:37
Speaker
So, first time the regulator allowed a broken company to also appoint agents under a new line of licensing called the point of sale agency, which essentially allows the person to sell simple products like motor health and life. Believe you me, those are the only products we want to sell for a long time. So essentially, it fitted perfectly. Akshay, there are two, three
00:26:04
Speaker
things that have gone absolutely right and God has been kind. The regulator in India is probably one of the most evolved thinking and IRDA is not just a regulator, they are also a development, the D in the IRDA and they have really played that part so well. So, they have realized
00:26:28
Speaker
Way back in 2015 and even today, some new recent regulations with the new chairman who is absolutely working like a dynamo and making things happen, I think are such a welcome relief for all of us. So essentially, in India, we are kind of catching up with what has already become a
00:26:51
Speaker
global norm and actually it's nothing to do with insurance. I think fundamentally today there is a large move into what I call open architecture. You know, whether it is Amazon or any industry for that matter, consumers are clearly enjoying the fact that they now have choice. So this whole concept of having these agents tied to a single company
00:27:18
Speaker
is, by itself, a little self-defeating. So, for instance, if I was, let's say, an insurance company's agent came to you and said, Sir, I have health insurance. So, what happens is, out of 10 customers, 5 kind of say, kind of thing, and it becomes an end of story there. But for the other 5 who say, okay, you know,
00:27:43
Speaker
Then this guy has to not only convince him about health insurance, but also why company X health insurance is the best and better.
00:27:55
Speaker
And in many cases, it's not the case. Let me put it this way. It is not necessarily the best in terms of feature. It perhaps is more expensive than some other competitors. So what can that agent do? He will either lose this case, or he will have to say a bunch of lies to try and push his product. Fundamentally, that's essentially what happens, because from an agent's point of view, right?
00:28:23
Speaker
So suddenly, when a renewable agent comes to you and he says, Sir Aapko, health insurance, Lene and Menepas, what are your plans? I can show it to you. And you say, Chalo Dikhao. Suddenly, within seconds, based on the inputs, I'll take a few inputs from you with your age, your family details and structure a planet in a matter of seconds. Just like I was telling you about two-wheeler, I will show you 12
00:28:51
Speaker
to 15 plans in a Jiffy. And then you can start filtering it out just like you would do in an e-commerce site, except that in a customer's case, he's not fully aware of all these things. So the agent will talk to him, that is the Renuba advisor, by saying, he can make those filters and
00:29:18
Speaker
Maybe the shortlist gets more curated to what you want, but you're still left with at least 8-10 companies to choose from. The premiums could be different. There could be a 20-30% variation on premiums. There could be some feature, or there could be a brand that you like, right?
00:29:35
Speaker
and it just makes the whole process so much more transparent, so easy. So, most of these advisors are clearly now able to double or triple their conversion ratio by joining a platform like RenewBuy. And in the process, delivered a right product for the customer
00:29:58
Speaker
and reduce this whole misselling in the process by saying, this is something that the markets across the globe have evolved to. Multi-product selling is what most countries now have, which is what they call the independent financial advisor or the independent broker.
00:30:21
Speaker
Coming to the actual product of it, like the digital product of it, there would be a couple of challenges to overcome. Like first would be, how do you create a product which issues a policy within minutes? Do you need to have some API integration with the manufacturer of insurance?
00:30:38
Speaker
So yes, there is a series of what I call technology integrations that we had to do with each and every company and standardize the journeys. In fact, now, at the beginning of this year, we acquired a deep AI-ML based tech company, which has added to our tech prowess, which actually delivers underwriting scores
00:31:04
Speaker
And based on various streams of data that we are able to connect of a customer and throw a score on the equivalent to like a civil score for the underwriter to take a decision. We are now working on a tech based disruption to deliver a
00:31:21
Speaker
claim. This is an incredible work in progress. I'm sure everybody who's listening to this and you yourself would have gone through some kind of hospital experience in your life, either yourself or with your family. And typically other discharge, around 11 or 12, the doctor says you're free to go your discharge.
00:31:44
Speaker
I can bet you nobody walks out after that for the next 8-10 hours typically because it is that amount of time and horrible process for the cashless claim to come through and there is so much of friction, so much of nonsense, more information collected and documents and blah, blah, blah.
00:32:06
Speaker
We are working on a solution which will allow you to walk out in one hour. Basically, there is a deep hospital to insurer to contracts and everything that is getting integrated. Essentially, the decision is being taken by the machine itself and it removes all errors and brings a lot of efficiency in the process.
00:32:29
Speaker
Tell me a bit about the journey of getting your first 100 agents signed up and selling your first 1000 policies. How challenging was that journey and how has it evolved to where it is today? After we put all the tech and everything, we launched it. It took you about a year to get the tech running.
00:32:51
Speaker
It took us about 6 months to get the first, which bomb didn't work and then we went back. So we started working with HDFC, Orgo, Reliance, ICSL, Umar, Bharatiya etc. And then many others came in. So we started
00:33:10
Speaker
by getting few advisors onboarded and doing the transactions. How are you sourcing it? Like you had somebody on the street?
00:33:22
Speaker
We had a team. We have a team. So we have a team where that team is now fairly large, but that team of relationship managers go and speak to agents and showcase the product and basically get them enrolled. So when we initially, that team was me and Indranil and few other co-founders ourselves. And that's exactly how it was. So we used to come to the office and wait for transactions to happen literally.
00:33:49
Speaker
And in the first few days, we were all in one room. One of the things I realized was we don't celebrate the small winnings as much as we used to do then. So when we did our 100th policy, there was a massive gate. Then we started doing 100 transactions in a day. And that became a big thing for us because it kind of said, it's a big thing.
00:34:16
Speaker
It's with dumb hair and this has legs. Let's work harder and harder. By when were you doing 100 transactions a day? I think it took us a good four, five months to get to that. And then we never looked back from then on in a matter of months with 2016.
00:34:34
Speaker
Yeah, 2016, correct. And then we started launching the four-wheeler product where the premiums then became important and then the other products. So we started, we reached the milestone of one crore premium in a month.
00:34:49
Speaker
And that became a huge celebration. And then people started taking notice. Sometime in 2017, we started hitting five crores a month. And that's when we raised our first institutional investor towards the end of 2017.
00:35:07
Speaker
Most days, we do more than 5 crores in a day. So it's incredible, right? So one of the things also, Akshay, was that first two, three years, people were saying, I had many, many ways to respond to that. But the truth was that I had many ways to respond to that. But the truth was that I had many ways to respond to that.
00:35:40
Speaker
And that was actually the reality, right? We didn't have that kind of money to throw around and experiment and so on. So that was the early days. And once we raised, we immediately spread across the country.
00:35:54
Speaker
And today I'm proud to say that there are only 760 districts in India and we are present in 730 out of them. So there is 96, 97 percentage of penetration. The second thing that we did was how we are extremely different from most of the competition and the insurance industry.
00:36:19
Speaker
In 2018-2019, we realized that Hambi, Wohi, 60-70 million customers, Wohi service, truth be told, because we were largely in the top 30 cities. It was occupying almost 80-90% of our business, just like the rest of the insurance industry.
00:36:38
Speaker
But since then, okay, Renew by 2.0 emerged.
Expanding into Smaller Towns
00:36:44
Speaker
And through 2019, through this whole COVID and everything else, we grew and quietly built our presence in Tier 3, Tier 4, Tier 5 down to the village.
00:36:59
Speaker
Original Village and I keep reminding my own team and myself that why did we start this business?
00:37:15
Speaker
And he should then go and insure the 50, 100 people in that village using the app and deliver to them low priced premium affordable insurance, which will save the day for that customer when the person needs it.
00:37:35
Speaker
I am so proud to say, today, 70% of renewable business comes beyond the 30 cities. Can you believe it? So we reversed the tide. Today, first 30 cities only represents 30% of the business.
00:37:53
Speaker
31 to 100 represents another 30-35% of our business. And of course, 35% comes from 101 all the way to the 750th district. We do business in Andaman, we do business in Kashmir. We do business in the smallest and smallest of towns. It is incredible how this wave has emerged. And one of the things we realized was building a retail agency network is the most important.
00:38:21
Speaker
We don't want too many, what we call big agents in our, we don't have any, any more. In fact, they also try to aggregate business. So we work with the smallest and smallest of agents. If agents are equal, if the two-wheeler policy, the two-wheeler policy is not as important.
00:38:49
Speaker
And the fact of the matter is many of these guys are constantly learning and increasing their business. Today, we have launched these health products, keeping in mind these very customers. We are now inching our way to, we are close to 5 million customers who have been insured by Renupai on our platform through these 90,000 agents who are present in all these companies.
00:39:17
Speaker
Yeah. So all of them, there is not a single branch that we need or operate and it's completely based on a digital platform. What are some of the challenges of expanding beyond tier one cities? Like probably you would need, I mean to acquire, you would need to have people in each of these small locations that could be one. I'm also guessing that.
00:39:40
Speaker
Typically cashless insurance happens with an approved workshop, right? Like there would be some workshops where it could be a cashless insurance. How does that get solved when you're going beyond tier one, tier two locations? So I think as far as the cashless part is concerned, both.
00:39:56
Speaker
When it comes to hospitals and with garages, there is an increased coverage that is happening. And bulk of the, I think in the first hundred cities, which is where all the private insurers distribution ends, the cashless networks are well in place. But you're right. In all the other places, it is mainly reimbursement.
00:40:20
Speaker
which is why settling the claim is very important. And we have taken the trouble of creating a very strong claim team, which the agent uses to deliver a faster claim settlement for his or her customer. And that's the investment that we have made. But the cashless coverage as we talk is continuously increasing. So we are happy with that part of the industry's efforts.
00:40:49
Speaker
The biggest challenge according to me is obviously finding people. So, most of our sales people have been with us since the start. That is another testimony and culture of Renubai. The other challenge is that insurance companies have never been in these markets.
00:41:09
Speaker
You won't believe beyond 100 cities, there are no private insurers present. So most of the companies today we do business with, we are doing more than 40, 50% business for these companies outside their branch network. So purely using our digital app led agent model. So you can imagine how we are adding
00:41:34
Speaker
to the insurance penetration of this country by going to most of these places where insurance was not present. And the challenge there is these insurance company products are not necessarily catering to some of these segments. So let me give an example.
00:41:55
Speaker
All insurance companies believe that you should get 5 Lakhs, 10 Lakhs health insurance coverage. Which means that the premiums are higher than the Pundra's or B's are higher. How much is expensive? That is not. So by pricing those products, you are ensuring that you will never reach these markets.
00:42:21
Speaker
We need products which are in the 5000 and below ballpark and that is what we have created using our own proprietary product thinking. We have reduced the inefficiency in the process, simplified the form and reduced the overall charge to the insurance company and created a product which is
00:42:46
Speaker
significantly cheaper than what he would get in the market. And at the same time brought the best features in that. Okay. Interesting. How do you acquire agents? Because agents is the, like the flywheel is around the agent, right? The more agents you acquire, the more revenue you get. So is it through digital marketing? Like can you
00:43:06
Speaker
get them through that channel? Or is it by hiring people who have roots in a particular area and they would identify? Both. The existing 3-4 million agents, Akshay, in my view, will soon migrate out of working for a single insurance company. And immediately look at opportunities that Renew By presents, where overnightly
00:43:33
Speaker
gets an opportunity to work in multiple categories and with 42 insurance companies. So we use digital marketing to reach out to agents and at the same time we also have a field force whose job is to constantly acquire agents in their territory.
00:43:50
Speaker
while working with the existing agents to teach them how to use the platform in the app. And we think that if we are successful in putting one advisor of renewable for every 500 households and then load the advisor with multiple products, I think we would have created an ecosystem and an infrastructure which can address the entire Indian opportunity.
00:44:14
Speaker
So, the important thing is to move from our current 100 almost 100,000 agents to three times that number. So, we will keep investing in growing this
00:44:25
Speaker
But again, the challenge remains when we go down the town class. Tier 3, Tier 4, most of the insurance agency also comes to a halt. So we need to create our own agents. Now, that's where the next wave of challenge will come. And we are betting on the India's smartphone penetration. A lot of people looking at a gig economy and wanting to be part of this whole financial advisory.
00:44:53
Speaker
We are also tying work with universities in several locations to see if we can add curriculums, which bring such courses, 15 day, 30 day courses, which then prompts many of these people to join us through these platforms and stuff.
00:45:10
Speaker
Why did you need to invest so much in claims? Because you have a claims team, plus you also acquired a company on the claims side. Because in my 20 years of insurance experience, I keep reminding everybody, including myself and everybody who wants to be in this space.
Building Trust through Claims Processing
00:45:28
Speaker
This is not some soap you're selling. This is not just some product you're selling or a financial product you're selling. The proof of the pudding
00:45:39
Speaker
of this product is being able to settle a claim and with all the respect that is due. You can settle a claim after making a customer go through a grind, which is a very pathetic situation.
00:45:55
Speaker
as though you're doing him a fever or something like that. He paid for it. He deserves to get the claim. So the way we think our brand will be built and will become a powerful trusted insurance service provider is by our ability to look each and every of our 5 million customers in the eye and say, if your claim is genuine, don't worry. We will be settling it at the earliest and we will facilitate.
00:46:24
Speaker
We work with many insurance companies and favor those relationships where they work with us in an integrated fashion.
00:46:33
Speaker
But having said all that, we have also realized that automating and building a digital journey on claim is also going to be the next wave of disruption that Red Yuba intends to. How do these customers file their claims like tier 3 customers? So there are a number of ways our agent helps them to begin with. So he knows exactly which number to call from or which insurer.
00:46:58
Speaker
The policy document also has a call center for him to lodge a claim. He can go online and lodge a claim. In case of motor, what happens is typically they go to the garage to repair and the garage facilitates. So there are a number of ways in which he can access the claim. And we are always...
00:47:15
Speaker
there to help our technology. And we also have a help desk where a customer can call in and access. So there are multiple points. What role does your technology play? Because this is an in-house function for an insurance company, right? Like they would have their own workflow. So right now, what role we play is that the agent is able to initiate
00:47:37
Speaker
the claim and register it with an insurer for the customer using his app, very smoothly frictionless, which essentially allows the claim to immediately get initiated and the processing of the claim starts ASAP.
00:47:53
Speaker
You eliminate back and forth by giving them a clear checklist that these are. So almost a full day of having or the pain of having to navigate through a call center, press one, press two, press three, which is highly I'm saying, especially for a customer who has
00:48:12
Speaker
who needs to go through a claim means he's already a little agitated. So, we smoothen that experience for him significantly. And most importantly, where claims get stuck for some reason, we either educate the customer or we insure both ways.
00:48:31
Speaker
to ensure that there is transparency in how that decision came about. A lot of times people understand if they're explained why some part of the claim is payable, some not, but most often what happens is dry communication is sent and the customer feels pissed off. So this is where we spend some time with the agents to ensure that there is a clear communication on that.
00:48:57
Speaker
This company you purchased, Artivatic.ai. That is exactly what I spoke about, which is the Deep Tech, AI, ML based company, which is now solving for this whole claim journey, firstly on medical and then on auto, and also creating underwriting scoring, working directly with some insurers. So it has doubled our tech bandwidth and our ability to continuously disrupt in this space.
00:49:27
Speaker
How is it improving the claims process? Like what is it doing there? So I was telling you about a hospital situation where let's say between 11 and 12, you would be visited by the doctor and said, okay, great. You're discharged. You're fine. You can go. And typically what we have seen in nine out of 10 situations,
00:49:52
Speaker
The patient actually walks out probably 8-10 hours later and this has nothing to do with anybody. The insurer is keen to pay and the patient is eager to leave the hospital. Who wants to stay in a hospital?
00:50:07
Speaker
But what happens is the documents that the hospital needs to produce and send across in a certain manner to the insurance company, that process is so, so broken and so full of friction.
00:50:26
Speaker
So, there is a scanning that is done. There is an insurance desk in these hospitals which tries to do something. Multiple phone calls are made sometimes even to the patient to produce more records, to produce this, produce that. There is manual interventions and checking done of these scanned copies and so on and so forth.
00:50:51
Speaker
And then there is sometimes a third party administrator there called TPA who's also involved and so on. So we have created a path-breaking system which connects a customer, a hospital, and an insurer. The entire process can start either with the government's new initiative, which takes the data from the UHI ID based on the customer's consent,
00:51:19
Speaker
or based on the good old documents which can be scanned using our system itself, but once scanned, it actually reads and converts it into a medical record. The system by itself checks against each of the policy details and the actual medical treatment done, cross verifies against what was agreed with the insurer and basically in a matter of minutes,
00:51:46
Speaker
decides whether this claim is payable or not and gives the insurer a full-fledged decision and actually lays out all the documents and checks for fraud, this, that, everything. So, why we are in this journey is we are
00:52:04
Speaker
at the brink of launching it with few insurers. And we think that by deploying the solution, we will have been able to deliver a claim approval and decision in half an hour, which allows a patient to leave the hospital in exactly one hour after the doctor sets.
00:52:26
Speaker
Look at the amount of convenience that is going to happen. The patient is going to feel super having bought a policy from a nearby or from this insurance company. The hospital is going to have a bed free ahead of time, which it can actually give to another patient.
00:52:47
Speaker
and India needs so many more beds and if you are able to churn out patients faster from their hospital beds, imagine there is that much more patients that can get treated and so on. So, it is again across the board and best part is it gives a better
00:53:04
Speaker
decisionless, error-prone, and at probably one-fourth the price that an insurer is currently spending, which comes back to either being able to reduce the price of the insurance or make more money for the insurance company, whichever way. So, I think there is a huge benefit that we are basically bringing into this ecosystem.
00:53:28
Speaker
So this is like AI TPA in a way. That's right. Amazing. It will replace anything and everything that the TPA does through this whole intelligent system, basically. And will this be interoperable? For example, could policy bazaar also be using it for their customers? Or is it only for renewal? It is possible. It is highly possible. And we are actually creating this solution, not just for renew by customers.
00:53:56
Speaker
We are working with some of the largest health insurers in the country and making this a system that they can use across their business lines. So in multiple ways, it will, we are trying to ensure that every customer can benefit from this process. Right. This is essentially a product for insurance companies and it makes their workflows smarter. Right.
00:54:18
Speaker
Right. And how does it fetch hospital data? Like is it integrated into the hospital ERP or there is a dashboard where? So it has integrated with few of the hospital systems that the NHA has provided already.
00:54:33
Speaker
But one of the things we have seen in this is that each and every hospital and chain of hospitals have their own system. So we have created generic API kind of model which can consume data from different formats.
00:54:48
Speaker
Notwithstanding that, we also can rely on good old scanning technology and we have an incredible OCR read on the documents which converts it into a intelligent medical record. And finally, I think if you're aware, the UHI program that the government is embarking on is slated to be as big as the UPI program and it will ensure that a large part of India have
00:55:14
Speaker
got their medical records stored there. So if we take the patient's consent, we can straight away access a digital version of the medical records and that will in fact make the decision happen in literally minutes. So it saves the trouble of even physically having to scan any document. What is the forefront of UHI?
00:55:33
Speaker
It's the unified health identification. So this is a program that we understand is going to be the next big initiative jointly by the Government of India, the NHA and it seeks to preserve all Indian medical records on common cloud.
00:55:52
Speaker
What about the Ayushwant Bharat scheme? Is that something which plugs in to renew by in any way? So through this program and this solution, we want to be able to offer this program and the claim decision for this, for the government sponsored scheme as well. So it will cover that as well. In fact, the module straight away has the product feature inbuilt into it.
00:56:17
Speaker
I think we are going to be the fastest digital ensure tech player and probably the first to break even and post profits.
Scaling and Profitability
00:56:28
Speaker
What we did was we front-ended and invested in a great team, great tech, all of which was required for us to scale so fast and rapidly. Today, we are seeing the benefits of that.
00:56:38
Speaker
Every month, our costs in the last one or two years have been fairly stable and stagnant, but our revenues have grown leaps and bounds. So this year, we will do about 2000 crores of premium, roughly. And so the market that we address, which is motor health, life is more than 200 lakh crores. So we are already a 1% player in that.
00:57:02
Speaker
lot of headroom to grow. Amazing. Okay. That's right. Okay. And what is the split between these products? So since we started with motor, Akshay, we predominantly even now have about 70-75% of our business coming from motor. Health and life being relatively new, but they'll quickly come to about more than 25% of our business already.
00:57:26
Speaker
What are the lessons to startup founders from your own journey of scaling up
Advice for Founders
00:57:32
Speaker
renewable? So I'm not probably, I would say extremely qualified to give lessons, but a few words of advice for anybody wants to start off. I think the most important is.
00:57:46
Speaker
being extremely a believer in what you do because everyone you meet around the corner is going to tell you why it won't work as much as you meet people who will tell you why it will work and you need to have a very strong sense of belief in what you have set out to do. I think that's one.
00:58:07
Speaker
Second is, I think never forget the first principles of why you started doing this in the first place. And the last thing it can be is about financial outcomes. Because I think once you start focusing on that, I can assure you, you won't go the distance. Because you've got to constantly think about what
00:58:29
Speaker
you set out to do and do that and execute on that and keep believing that what idea you have and the differentiated approach you have will work and everything else will fall in place. 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.
00:58:59
Speaker
right to me at ad at the podium dot in that's ad at t h e p o d i u m dot in