January 28, 2016
LTP recently got an opportunity to interview the Founder and CTO of Coverfox Insurance Broking Pvt. Ltd., Devendra Rane. He started his entrepreneurial career as the Co-founder of Innovations Unified which was the winner of "Eureka," Asia's biggest business plan competition.
Since then, he has co-founded two companies, one specializing in user experience design and the other providing technology services to the financial and insurance domain.
He has worked with many technology startups at various stages. He is experienced in conceptualizing appropriate minimum viable product (MVP) for startups as well as enterprises. He has managed globally distributed projects and teams and has a pragmatic understanding of developing products in such environments. With his valuable experience in large-scale consumer and enterprise platforms, he understands the scalability of an evolving product as it goes from being an MVP to a successful product.
LTP: Would you brief us on what Coverfox is all about?
Devendra Rane: Coverfox is basically about making sure that a customer’s needs are met the best and making sure that the customer understands what he/she buys. This is one of the core underlying philosophies of our product. Also, unlike other aggregators and brokers, we want to be there when the customer experiences the pain.
Insurance is not a product where there is instant gratification. I can’t really say I’ve got insurance and it is good. The only way to understand whether it is good or bad is when we actually make the claim. We put a lot of focus on claims and make sure that we stand beside him/her and help him as many ways as possible when the customer does claim.
Coverfox is about finding the best insurance product for a customer and making sure that product is consumed in the simplest and painless way for him.
LTP: Please tell us about the services you offer.
Devendra: We started with the health platform because our personal experience with buying a health insurance was pretty bad. That’s what we wanted to target first and so that’s how we started with the health platform. On the health side, we sell health insurance and super top-ups. Then we have motor insurance where we have tied up with pretty much all the insurance companies in India who are selling motor insurance. We also provide travel insurance. This quarter, we are also launching life insurance.
LTP: What according to you would be a distinguishing factor for Coverfox?
Devendra: Technology. The reason we are in this business is because we saw a big gap in this sector and we realized that the best way to fill up this gap is the better use of technology. We focus a lot on technology hiring. The kind of technology we develop is basically very customer-centric. If you look at the Coverfox platform, you will see that we are the only insurance player in the country today where you can finish buying a motor insurance product completely on a mobile phone.
With the help of technology, we do a lot of customer analysis. For example, when a customer comes to us to buy health insurance, we take a lot of his demographics into account. We figure out what his age is, the part of the country he belongs to and how many children he has. We take all this information and we have an insurance intelligence engine which figures out what kind of health insurance should be provided to him.
LTP: What business model do you follow?
Devendra: Our model is essentially a commission model. We are an e-commerce startup with insurance domain expertise. If you look at an e-commerce company, it is basically a marketplace platform the way we are but the margins are very small in e-commerce. In insurance, the margins are reputed and regulated by the government and the margins are pretty big. For example, for every health insurance, you get a 17.5-20% margin. For every motor insurance, our margins are about 10-15%, which is reputed by the government of India. For life insurance, our margins are 30-40%.
In the long run, insurance is a renewal business. Basically, a good 90-95% of our customers renew every year. Whatever policies we have sold last year, 90% of those customers will renew it again this year. So it is an annuity compounding business.
LTP: In India, the percentage of people managing and buying their insurance policies online is negligible. How do you plan to grab this market segment?
Devendra: Insurance is one of the largest sectors and online insurance is growing at 20% every year. Suddenly, there is going to be a jump and it’s already happening because there are a lot of players who are putting lot of money and marketing into insurance and are making people aware that online is a good way to buy insurance. Also, what’s happening is that insurance companies who had been trying to do offline distribution of insurance plans have realized that it is cheaper for them online. So now when you look at an insurance company, they have started advertising that online is a great way to buy insurance and that it will be as good as an offline policy. And people understand it because they get a better policy at probably better rates. They don’t have to interact with someone because the platforms are becoming better. These small things will help in growing this sector and probably, in a few years, we will have to stop worrying about the whole online market share of this sector.
LTP: What are some of your important partnerships and how do they help? What are the key next steps or important milestones for Coverfox?
Devendra: In terms of partnership, I think we have partnered with pretty much all the insurance companies in India and all of them are equally important to us. We help lot of them with data; we help them in figuring out what kind of insurance the customer is looking at.
The other thing which is important to us is that by the end of this year, we are poised to become the number one player in auto insurance in India and the top broker in terms of the number of policies sold online. We are doing a lot of partnerships with car dealers and online dealers and online companies. I think those are very important to us because we believe that a lot of auto market is moving online. Auto insurance can be a great added benefit to all those online portals who actually doing auto online right now.
In terms of next steps, here are the quick things that we probably want to do in the next quarter or end of this year: As of now, there is no insurance or financial insurance player globally which has been able to figure out a customer engagement app. This year, what we are experimenting on is getting a customer-facing mobile app which is engaging enough for the customer to manage their insurance and figure out a lot of things. It is for us to figure out the behavior of customers so that it will help customers in buying insurance.