Ditto is the case with financial products like insurance policies and loans. There are some companies like ApnaPaisa.com, MyinsuranceClub.com and PolicyBazaar.com that help you buy these products online without the hassle of an agent. These companies reckon that the potential to sell insurance or loan online in the country is huge. While there is still a long way to go in the acceptance of this segment, recent numbers by leading players show that an increasing number of consumers are doing research for different financial policies online, and even buying them on the internet.
Yashish Dahiya, CEO and co-founder, PolicyBazaar.com says, We sell 30,000 insurance policies every month. Almost 10,000 of them are sold through our call centres, up from 7,000-8,000 per month in 2011. The other 20,000 policies are sold offline by insurance companies where we help them get the lead.
Typically, companies like PolicyBazaar help a user know about different insurance products available online, so that one can make a comparison vis-a-vis other products. The company also started helping people with loans a year and a half back. This segment now gets PolicyBazaar about 15% revenues. Basically PolicyBazaar is an insurance research engine, which allows intelligent insurance decisions.
It empowers the consumer to compare insurances from over 46 companies and make intelligent purchase. The website enables a consumer to research and evaluate products and select the best product for their needs.
At a basic level, buying on such websites enables a buyer to save on the commission given to the agents. An astounding three crore policies are sold every year in the country, so one can imagine the amount earned by the commission agents. The average they earn is 30% of the total policy.
Akshay Mehrotra, chief marketing officer of PolicyBazaar says, We have also seen a trend that companies are now launching more and more products online. The biggest achievement for us has been that our conversion rate of sales last year was 0.2% and now it has reached 1%. Optimistically, we predict that soon it will be 7 to 8 % in the next few years. He reveals that term, health and motor insurance policies sold most on the website.
Even tier II and III cities are now investigating in financial products through the online medium. PolicyBazaar shares that now 60% of its business is from metros, which last year was 70%. The last one year has seen a transition of smaller towns also inquiring about insurance policies online. The conversion rate too in smaller towns is higher as these people do not have other facilities to solve their queries and doubts.
Deepak Yohannan, CEO, MyInsuranceClub explains the challenges in this space, There is a long time in the acceptance of online medium in the insurance space. This requires time and will not happen in a hurry. In the general insurance space, which includes car insurance, the acceptance is much higher. But for life insurance, there is still a long way to go. He mentions that in some cases the products are 300% cheaper to the customer when one is buying a term plan through an aggregator like MyInsuranceClub. This is because the Insurance Regulatory & Development Authority of India (IRDA) rules for the aggregator are very strict. Now that we are an approved website by IRDA, there is a challenge to integrate the website with the insurance companies. This needs coordination as the insurance companies have to real-time speak to the aggregators website. And we are investing in this process. he says.
Sharing a broader perspective, Harsh Roongta, CEO, ApnaPaisa.com says, The financial sector has made itself visible in online space in a fairly large way. We deal in three distinct segments loans, insurance and investment. Loans is the biggest business for us. As far as this segment is concerned, there is huge emphasis on researching products online. Still there is a substantial gap in online and offline research that people do on loans. We get around 50,000-plus applicants a month. This means that these many people research about different loan plans and we know their profiles. Out of this, 22000-odd are home loan applicants.
Roongta explains that the above mentioned figure is a fairly large number. Overall, the country had 25 lakh loan applicants last year and about 13 lakh loans were dispersed last year. There are 17 lakh visitors a month for loans on ApnaPaisa. So the mantra for the consumer is research online and purchase offline. We get paid per lead. We are not in the commission business, he clarifies, adding that there are some regulatory constraints in this market, but the market is waiting to explode. In the insurance segment, ApnaPaisa gets around 15,000 applicants a month.
Online players in this space feel that the big growth is still 18-24 months away for e-commerce head northwards in the financial sector. The brighter side is that consumers are realising that this business model is not such where an agent gets into your house and keeps pushing until you buy the product. This is completely in favour of the customer.