Growing up in the age of Google, millennials are yet to come across a problem whose solution is not at their fingertips and not quick enough. But insurance has traditionally been sold offline. Though online comparison sites and web aggregators such as Policybazaar and Coverfox have arrived, many young customers are remain confused due to lack of simple insurance products across various segments. Getting money from insurance also needs to be simpler. The insurance claims process needs claims to be as painless as, say, returning shoes on Amazon, says Rohan Kumar, CEO Toffee Insurance, that works with major insurance providers to co-create 'bite-sized' insurance policies. His company, backed by Kalaari Capital, Omidyar Network and Accion Venture Labs, is betting big on contextualised insurance policies. In an interview with Kumar Shankar Roy, Rohan talks about why urban millennials customers need them, how context is probably more important the policy and what it takes to make insurance affordable, simple and relevant. Read on.
Insurance is many things, but why did you choose the name 'Toffee Insurance'?
Insurance carries a lot of mistrust and financial baggage. We wanted to break this mould and make insurance approachable/relevant to the younger modern demographic. Since our focus is to co-create bite-sized insurance products that are affordable, simple and relevant - the name ‘Toffee’ made sense. Plus its a fun, young and playful brand that mirrors our team culture and philosophy.
Tell us about your journey so far; important milestones; investors and promoters etc.
We started working on Toffee Insurance in 2017. Majority of the year was spent in building out the initial team, developing our tech platform, getting our compliances from IRDAI, and carving partnerships with multiple insurers. We also raised an angel round in Sep 2017 via early investors - Vivek Gujral & Harshal Shah who are veterans from the insurance ecosystem. We officially launched in April 2018 with 6 retail products and about 3 Group products. This was about the same time that we closed our first institutional seed round of 1.5 million USD via Kalaari Capital, Omidyar Network and Accion Venture Labs in May 2018. We spent the next couple of quarters focussed on new channel partners for the distribution of our products. This included partners such as Apollo Clinics, Hero Cycles, Firefox, Wildcraft, etc. We are currently active in 90+ cities pan-India. Sales are spread equally across Tier 1, Tier 2, and Tier 3 cities. We continue to focus and create interesting products that are creating a new category of insurance products.
Why do customers need you?
Toffee Insurance intends to make small insurances relevant, affordable and accessible for the uninsured. We propose to do this by implementing these core strategies:
* Innovation of Products: Since privatization, little to no innovation has been seen in product personalization. Products have not been adapted to modern lifestyles. We curate de-bundled products that are contextualized, easy to understand, with low price for on-the-go purchasing. Simultaneously, we work with channel partners and use deep data-mining techniques to drive context for offering personalized and relevant products. For example- We launched the first ever bicycle insurance product in India that covers the cycle as well as the rider in case of accidents in a tiered pricing format to increase the under penetration rate of insurance within India.
* Transparent User Experience: Toffee Insurance’s simplified platform experience allows consumers with low data connectivity and basic smartphones to engage with and purchase Toffee Insurance products. The entire user experience (UX) is digital via a progressive web app for a seamless and end-to-end user experience. De jargonizing and simplifying complex terms eases customers into the whole process and ensures quick turnaround time. Our priority has been to maintain clarity in product flow, inclusions, and exclusions, thus reducing the barrier that exists due to unfamiliarity.
* Easy Servicing & Claims: Growing up in the age of Google, millennials are yet to come across a problem whose solution is not at their fingertips and not quick enough. Minimizing purchase time and easing the claim process to take out paperwork, frustration and decision fatigue is the signature of Toffee Insurance products.
How are urban millennials as a customer segment different from others when it comes to buying insurance?
For the urban millennials, the current product offering doesn’t have context, which is why it’s such a hard sell. ‘Why do I need this’, ‘I don’t have major health risks’, and ‘This doesn’t affect me’ are their first thoughts. There are specific risks, however. And it’s especially important that this newly financially independent group begin to think about financial stability and wealth creation. Contextualized insurance policies make sense and introduce them to financial planning without neglecting their income and lifestyle requirements.
You claim that a 'toffee' is insurance minus the headache...
Having closely studied the market we realized that this industry was in desperate need of innovation and fresh thinking. Policies lacked understanding and were filled with jargon. There was a lot of ambiguity, mistrust and complete lack of context, making it extremely difficult to penetrate the growing digital economy. As an intermediary, Toffee Insurance partnered with the major insurance incumbents to deconstruct over-complicated and vague products to set a context to users’ lifestyles. The inefficiencies of paperwork and decision making were removed by standardizing document requirements. On average, purchasing time was reduced to under 90 seconds with claim processing within 24 hours. The entire user experience (UX) was turned digital via a progressive web app for a seamless and end-to-end user experience.
You have launched India’s first Salary Protect Plan (Kamai Bachao Yojna) Health insurance in partnership with Eko to protect loss of income in case of hospitalization. How does this work? How is it better than existing alternatives?
Toffee Insurance’s partnership with Eko is a part of the financial inclusion plan for the Next Half Billion who represent the 500 million first-time internet users expected to come online within the next 5 years via their mobile phones. Toffee Insurance’s Salary Protect plan policy has been underwritten by Apollo Munich. This policy is a straightforward coverage plan of Rs.1000 per day of hospitalization for up to 30 days. It is eligible for individuals between 18 yrs to 65 yrs of age and is created as an income replacement plan for daily wage earners. The claiming process is significantly simple, requiring only an uploaded photo of hospital documents by visiting any nearest Eko Merchant, pan-India, to file a claim. With this partnership, the largest obstacle is overcome - as the Eko merchant serves as a micro-influencer. Once they have converted the consumer online, completing their first digital transition, the merchant introduces Toffee Insurance’s Salary Protect policy and can complete the seamless, all-digital process under 2 minutes. The product is essentially a simpler and affordable version with a very low premium of the traditionally complex hospital cash insurance policy offered by other insurers. Moreover the product is truly accessible with - no forms, no hidden clauses, ease of purchase and claims. As hundreds of millions of young Indian workers enter the labour market, we can mitigate a significant portion of their immediate risk at the touch of a button.
You say you have partnered with seven major insurance carriers to provide curated and tailor-made policies. Please explain what do you mean by tailor-made policies?
Toffee Insurance works with multiple underwriters such as Apollo Munich, HDFC Ergo, Future Generali, ICICI Prudential, Tata AIG and Religare which allows us to de-bundle comprehensive products and create new products wherever possible. Tailor-Made policies are contextualized mass-market insurance products at attractive price points with singular coverage that span verticals such as health, travel, personal accidents & other non-life segments. Essentially, we break down comprehensive products and price risks for specific scenarios that may have a mass usage scenario. This is an iterative process and we work in conjunction with our insurance partners to get the right construct and price models for categories that we select.
Is the claim experience different for customers who buy insurance through Toffee Insurance?
Our starting point was to remove redundant processes from the claims filing workflow. Why should a claim for Rs 1000 take the same amount of time as a claim for a critical illness which may be in lakhs? Since our products constructs are simple - the claims process is modeled accordingly. In most cases, we only need a few documents easily available to initiate a claim. We have built our technology platform to make claims as painless as, say, returning shoes on Amazon. Starting with the assumption that almost all customers are making honest claims, we strive to treat them in that way. If a cycle is stolen, for example, we simply ask for a Police Intimation Report (filed online) and a photo of the customer’s Aadhar card. That’s it. Claims can thus be approved and money sent within a few days.
How big is the space for contextualized mass-market products in India?
Today, there are about 450 million digitally active consumers, using more than 8 GB of data per month. 65% of the Indian population is below the age of 35, representing the largest cohort in human history. We are really trying to solve the needs of the Next Half Billion (NHB). They are early adopters to a wide range of services including new financial products across this demographic, yet penetration of insurance products remains in single digit across this cohort. Insurance is best understood when there is a context attached to it.
What is the company's plan to grow? Are there any global benchmark companies that have achieved roaring success in providing contextualized mass market products?
Toffee Insurance sells specific products, tailored to our audience’s unique needs. Our business model as an insurance intermediary has no direct competitors in the Indian market. However, there are similar othering in different markets, such as Lemonade in the US and Trov in AU. Specific to the Indian market, we are differentiated from the typical web-aggregator models and traditional insurers. However, with the recent explosion of the Fintech ecosystem - we do feel that there may be other financial startups who could start to imitate us closely.
You already have the likes of Policybazaar, Coverfox, etc. in the online insurance space. How is Toffee Insurance really different from such players?
These are comparison sites and aggregators, offering broadly comprehensive policies allowing consumers to make choices amongst existing traditional plans. At Toffee Insurance we take a product first approach. We believe the gap in this ecosystem is driven due to the lack of simple insurance products across various segments. Once we identify the right product construct we then focus on carving a strong distribution partnership that adds relevance/ POS (Point of Sale) mechanism to these insurance products. What makes Toffee Insurance different is its ability to analyze, predict and customize product offerings that reduce the risk for this young demographic.