The Asia InsurTech Podcast spoke with Arijit Chakraborty, managing director for APAC at Cover Genius, about embedded insurance and the need for personalization.
Here is the transcript of our conversation.
Michael Waitze
Okay, that’s on. Hi, this is Michael Waitze, and welcome back to the Asia InsurTech Podcast. This is the only show in Asia focused on insurance that gives entrepreneurs, thought leaders and investors a platform to discuss how technology is reshaping the insurance industry globally. Today I’m joined by Arijit Chakraborty, managing director for APAC at Cover Genius. Arijit it’s a pleasure to have you back on the show. How are you doing? Have you been a little busy?
Arijit Chakraborty
I’m doing well, Michael. Great to be a part of the show. Again, busy being an understatement. But it’s great to be in that space we are we are having right now. And it’s great to be busy in this pandemic situation.
Michael Waitze
Absolutely. Look in April, just to set the stage in April of 2020. We had Chris Bailey, so a co-founder of Cover Genius on the show and talked a lot about new channels of distribution and how technology enabled them and related topics. And as you said, it’s an understatement that you’re busy. But it’s also an understatement to say that a lot has changed in the 18 months since that time. I want to back up a little bit for context. You’re an industry veteran, you’ve been in the insurance industry for a long time. How would you characterize the state of the insurance industry as a whole today? Versus how it looked, I don’t know, five years ago?
Arijit Chakraborty
Sure, Michael, to answer your first question. Since the last 18 months we have grown extensively. We have added 20 plus global partners across various verticals, whether it’s online travel, airlines, ecommerce, logistics, ride hailing. And these are all global partnership and all with tier one brand names. So yeah, so the team has been very busy and my predominately job of you know, hitting the whole APAC market was to grow the entire business and the people and the talent. And what we are blessed with to have, like industry, maybe best challenge in the InsurTech space. You know many countries in different Southeast Asia, India, Korea, Japan. And that’s what has also happened in the last 18 months, we grew significantly in terms of talent counts in the region as well. Now, if you’re going to the second question you have is on on the trend and what I’m seeing, yeah, to give you more about you know, what has changed from before, right? I’ll touch a bit on my personal journey to give you the whole context, but where I’m seeing the trend happening is more on the embedded insurance. Because if you see this current area in a complete digital area customers are they targeted and they get tailored ads in offerings based on their data, whether it is first party or third party data and what is what is where the customers want is a more online experience of a seamless curated even based individual needs. So what we are doing at Cover Geniuse we are a global leaders in embedded insurance, and the traditional one size fits all do not work with how we are designing products. So what we do is embedded insurance through a single integration, which makes it easy for customers on a convenient experience and uh, you know, building that customer lifetime value is what we predominantly do as a business and that’s why we work with all the large accounts whether it’s you know, booking holdings Agoda which is a part of the booking, eBay, Skyscanner in the e-commerce site as mentioned eBay, Wayfair we are going live with large e-commerce in India, Southeast Asia, including Shopee we are live with. So, there is a multiple accounts which we are doing and that is a trend which we are seeing in the whole InsurTech ecosystem is where we are which is embedded insurance. Now, if you go what you asked five years back, when I was in senior management with insurance MNCs insurance has been predominantly being distributed by either the underwriters or through brokers or through large bancassurance deals. As an example, in my last corporate job, I was involved in the largest bancassurance deal between Manulife and DBS. And that’s where traditionally the distribution channels have been. It is still now the main channels as well. But I think where things have changed is people are looking for the data and the transactional data to come up with curated insurance contextual propositions, at the time of signing up, or at the time of buying any goods or services in their online in their favorite online app or store. Whether it’s an OTA, e-commerce, ride hailing, logistics whatsoever. Right? That has been the trend. If I call five years back, if I would have gone to those proposition back to the underwriters, maybe it was they wouldn’t have realized this. And I remember when I was sitting in my insurer rolls, and if InsurTech style, there were no InsurTechs back then, knocking on their door, we wouldn’t have given much of an importance, we wouldn’t have realized, what difference will they make? Because as an underwriter, we think that we are very big to fail or to do anything wrong, right? Now, interestingly, I think all the insurance companies wants to work with InsurTechs. And that has been a real transformation from what was done in the past, like importance of InsurTech. And now five years down the line, where now insurance partners are looking for InsurTech partners, because they want to go to that whole digital area. And obviously, pandemic accelerated the whole digital ecosystem.
Michael Waitze
But what else changed? Was there some kind of technological change that force this to happen or that encourage this to happen? Right, in other words, is compute just so much faster, is throughput, so the sort of ubiquity of the connectivity that we have better? Is it the implementation of services in the cloud and micro services? Or is it all of those things? Like what changed so that insurance companies now are so much more comfortable? Or is it just time passing?
Arijit Chakraborty
I think it’s more digitization what we are adopting, as an example, as I said, like the pandemic obviously accelerated because I was reading somewhere that what accelerated digitization in your company, whether it’s a new CEO, new CTO, or COVID, have the answer is COVID. For sure, right. So so where things have moved is because of the whole lockdown. And things have started evolving before lockdown. But let me start with the lockdown first. People were not doing those face to face meetings anymore. Conventionally how insurance is distributed it is is a standalone insurance products available on a website of insurance companies, or it is distributed through intermediaries, whether it’s bank, relationship managers or with brokers. And all these things are relationship based, where they go do a need analysis face to face, and then they sign up for policy. All these policies are not personalized, they are not customized to the particular needs of the customer. These are across everyone. And if you look at the whole life insurance and the non life insurance space, and if you look at the products across, all products are pretty similar to each other. So if you take XYZ life insurance, and ABC non life insurance, and if you go buy life insurance, investment, insurance, and travel, they all look the same. Where things have changed is people have realized that we are in an era that people want personalization, people want to cover their particular that product and service at the time when they’re signing up for the product and service. Because insurance, again, unfortunately has a very negative connotation sometimes. If you look at our NPS score for underwriters, when I was again in the back end of my corporate role, as a senior management, our targets were can we get our NPS from negative 15 to negative five? Whereas if you look at the Cover Genius, we have a positive average NPS of 65. Yeah, and that is post claims. Right? So why there is a difference because we are curating products, which are contextual to that primary product or service, a customer is buying. So it’s seamless, it’s convenient, it’s transparent, you exactly know what you are buying, and you pay for that. And your operations, claims handling, everything is automated. Everything happens at real time basis, compared to conventionally how insurance is distributed. Because of these changes? I think more insurers are happy to that this is becoming serious, this is becoming a competition. And that’s where they’re moving towards. That is one reason other reason is mainly the large distribution players if you see and, Michael, you’re again veteran in the in the space of following the trend. You would have seen all these large distribution houses whether it is e-commerce, for example, Flipkart, Shopee, Amazon, or whether it’s an OTAs. OTAs have done that, but mainly ecommerce. They never had insurance in the past as a checkout option. They are adopting insurance or warranty products as a product differentiation and bringing it to their captive audience. That trend was not there five years back now. So more or more digital distribution partners, irrespective of what industry they come with, and the new digitization of banks, neo banks, wallets and payment industry being made huge strides in the last five years, right? And that’s where they’re looking at those embedded finance and embedded insurances and new trend. Because those digital enhancement of the distributions were not there in the past. That’s where the conventional or traditional insurance operated the way they operated those businesses.
Michael Waitze
Yeah, I mean, look, we had Prannay Batra on the show last week, we’ll release that I think in the following week. He’s the head of insurance at PhonePe in India. And, you know, this is just the PhonePe just had been a payment service forever. And they are also branching out what they what do they have like 280 million, 300 million people on the platform, right? So it’s perfect for insurance distribution. Again, and another thing that didn’t exist five years ago, even though PhonePe didn’t exist five years ago? Yeah.
Arijit Chakraborty
Exactly. That’s what I’m saying. Because of insurance being adopted as embedded finance, or embedded insurance to these massive digital partners. That’s how the traditional insurers are looking at a change because they know that people are not coming to XYZ insurance company’s website and buying an insurance. They’re buying from their favorite apps, they go on a day to day basis, and they want to cover their immediate need, rather than buying it in a conventional way. So that is where the whole embedded insurance and embedded finance have shifted. And again, because of adoption of, you know, large players like Paytm, and all that none of these players existed, or was big enough, five years back.
Michael Waitze
Yeah. And this idea of being contextual is also really important. This is the other point that you’re making, right? If if you want to buy insurance, or if you had wanted to buy insurance five years ago, in a specific context, but it wasn’t embedded there, it was just so difficult to do, because you had to go somewhere else to do it. And today, you don’t have to do that anymore. Is that fair?
Arijit Chakraborty
Absolutely. So one is on convenience, seamlessness, the other big thing is transparency. If you buy insurance, or convention you will have given because, as a background, I was a lawyer in my past life, and I have drafted for insurance terms and conditions in the past. And if you see them, most of them didn’t understand what they’re buying. These are, again, 20-25 page documents. So that’s where there is, again, going back to my NPS score, insurance was actually as an NPS industry, unfortunately, was rated slightly higher than a used car dealer industry. So you can you can imagine the trust level to insurance. Now now with InsurTech and adaption of what we do, we actually encouraging is we rewrite the entire policy document ourselves, we make it these are the five bullet points, which are inclusions, these are the five bullets, find the exclusions, you see that the model pop in your mind that you click on it, you go to the card, you make the payment, boom, your policy is issued to your mailbox incentive. That’s where the change is happening, because people exactly know what they’re paying for. Because previously, it was very confusing. Try getting a health insurance plan for your business, very confusing with all the terms and conditions and comparison, and then you’ll be surprised and I have been surprised as an insurance industry player, when there is a claim and how claims get rejected, and how people can take shelter on fine prints to reject the claim. That transparency is also has shifted significantly in the insurance.
Michael Waitze
It has. Look, I want to keep this theme about complexity. And I want to talk specifically about Xcover and the complexity of operating in and maintaining licenses in 60 countries, right? I mean, even in APAC, every country has its own regulatory environment and local nuances. Can you talk about how just how challenging that is and how that’s disintermediated by technology?
Arijit Chakraborty
It is definitely the challenge, which is the beauty of the work right, any business if it’s challenging, you know, then then you can scale it, you can grow it and the entry to the business is complicated is not straightforward. So, people cannot replicate that very easily. So that I like about again on the InsurTech business. Now, the challenges are as you rightly pointed out, each and every market globally, and especially in APAC, they are not only different. They are different in terms of language, culture, people, business ethics, regulations, and whole corporate governance framework. So you need to look at that’s what how we did is we are we are not only licensed 60 plus countries, we are also licensed in all 50 US states. And you know, US states also they consider to be different countries, right, because they had the tax treatment and everything and regulations are different with the regulatory side. So how we addresses, we invest in a particular market to look at, you know, sourcing an individual, when an expert in that country help us out that what should be our regulatory framework? Should we get a corporate agency license? Or should we get a broker license? Or should we partner with someone instead? What is the best way to approach the market from a regulatory perspective? Shall we do a b2b policy or we should issue a b2c policy? Or we should do a warranty framework or an insurance framework? Actually, to answer you, Michael, it’s not a one size fits all a game, you have to look at each market, you see what works in that market, what should be the appropriate regulatory framework, then decide whether we should get our own license or partner with someone and then go and approach the market. And that is how we have been successfully doing business across all these markets. And the biggest advantage of our Xcover tech is, is the scalability, right take take booking holdings as one of our accounts. Yep, we have a single integration with them. And we handle 60 plus countries for them. How it happens is, is kind of when you’re buying journey, whether you are in as you are in Thailand, or Mexico, or Brazil or Singapore, India, your buying experience is the same, it’s kind of buying a Google product or walking into a McDonald. Your look and feel of buying a rental cover insurance is the same. But when you’re originating from Thailand, there is a Thai insurer who is issuing a policy when you are orginating from Brazil did a Brazil Brazilian insurer issuing your policy, that is what we did. We did a globally scalable, Xcover platform where with a single integration, you can handle multiple products and multiple markets at the same time. But underlying, we handle the compliance so that someone like booking do not have to interface with our direct insurer in Thailand, in Indonesia and Vietnam, we handle the whole compliance, and we handle the real insurance relationships so that you can get a consistent optimized product and pricing across to the partner.
Michael Waitze
Yeah, so in a way, it’s kind of neat, right? Because it’s seamless for your partners, as well as seamless for the people that are actually using the product at the back end. Yeah. Does that make sense?
Arijit Chakraborty
Absolutely. So I’ll give you another example. Let’s not take an example of up, like Shopee has an account it is in six different markets, right. And we are working with them regionally. But let’s take an account which is in that market, they are big in that market. So I cannot name but we are going live with one of the largest e commerce in India. Okay, and what is the problem statement which we are solving. Currently, they might be integrated with seven different underwriters for 10 different product lines and insurance, then what happens, you’re buying this insurance from the platform, then on the time of claims that e-comments will direct the customer to that particular insurer for claims management. How we are solving this with our single integration can handle multiple products. So when we go live with one product vertical, we can use the same API connectivity for all future products. So first of all, your take bandwidth gets significantly reduced. Second, when there is a claim, it hits our ethanol. So whether you’re buying any category of product, whether it is furniture, fashion gadgets, whatever you’re buying, you have the same claims experience, you hit the same if knowledge comes to us, we do the verification, then we see whether we need to send it to the underwriter or not. So you’re buying experience, claims experience, operation experience, we give, you can log into our Xcover, you can see exactly how many policies you have bought out of that. And you can initiate claims and everything from there. So there is a CRM, which is also thrown in there. So if you look at the whole value prop, it’s way stronger than integrating with multiple underwriters for each product line.
Michael Waitze
Yeah, but it’s also easier for the for the end users, right? So if I’m, if I’m working with if I’m buying on one of these big e-commerce companies, as you mentioned, I don’t really care who’s providing me the insurance as long as I get it. And if my login is only in one place, I’m indifferent. Like to me that API connection is a lifesaver because I don’t have to deal with five or six different providers. I just deal with one right?
Arijit Chakraborty
Yeah, absolutely. You are bang on because if you look at the customer experience that’s that second gets enhanced, right? Because at the end these people because there is of active competition, they are spending a lot of money in the UI UX and embedded insurance, finance sort of helps with that, right? So you need a consistent, seamless journey for the customer. And I have seen products which are non contextual at all. So we don’t do, again, as an example, and which you brought it up before Michael is contextuality of the product. I’ve seen products. Again, not deeming partners, I don’t want to offend anyone, but cancer cover getting distributed in OTA platform. And I don’t see a relevance.
Michael Waitze
I’m laughing. I’m not laughing about cancer part of it. I’m laughing at the incongruity of cancer on an OTA platform. But please go ahead.
Arijit Chakraborty
Yeah, so my point is exactly in the in the name of digitization, we don’t just plug in any product, it has to be contextual. It has to be based on a transactional data, which the customer currently wants. And that is what we design and then plug in to our digital.
Michael Waitze
I mean, it’s, it would almost be like offering motor insurance on a health and wellness platform.
Arijit Chakraborty
Exactly, exactly and when you started, you know this conversation like five years down the line, people thought insurance company thought digitisation means you have a product, which is available online to buy. So that thing has changed, you have to leverage the data to come up with the contextual product, and it has to be very seamless in the consumer journey. So within one click, you can buy it and you can get the benefits of it.
Michael Waitze
Absolutely. I want to do you want to talk about the partnership you have with Ola on a more specific basis. So you can run through what that looks like and the significance of that as well.
Arijit Chakraborty
Sure, Michael, so Ola we launched in international markets in Australia, UK and New Zealand. I think it’s an interesting account to talk about, because it gives you the example of how transactional data can leverage on embedded insurance. So if you look at other ride hailing products available in Southeast Asia example Grab, and if you look at that 30 cents product, which is attached to every ride, it only covers you death and disability. Now, having a data disability in Grab ride in Singapore, you can imagine you can clock in a lot of numbers in terms of policies, but at the end, what we believe in is insurance needs to be experienced. And that experience can only happen when there is a claim. Because it’s not buying an iPhone, right you touch and feel you can you experience it, it’s a promise which you are buying. And it only gets needed when there is a claim. So we come up with product constructs, which are very relevant to what the customer wants. Example, again, going back to the Ola product construct it if you if you book the Ola cab, and it reaches 15 minutes late, you get actually a $10 voucher out instantly. If you lose your personal belongings in the cab, which happens, we also pay out that after some verification to see whether it is no fraud. If you’re taking a ride to the airport, and because of traffic condition, you miss a flight, which obviously happens a lot in specially Jakarta and Bangkok. And the Southeast Asia cases, you actually we pay for the flight. So if you look at these are embedded as as per ride when you’re taking a Ola cab, even though we make things which are very customer centric, for example, even though you suppose you lose your mobile in Ola, but you call the hotline, you could retrieve the mobile, we still pay you a $40 inconvenience cost to reach retriever. Why I’m giving these examples. I’m giving this example because we just don’t plug in a product and put it in a distribution partner. There is a lot of mind and heart to our product construct to see what is beneficial for the customer, and provide those, you know curated and innovative solutions to them and manage the risk from going forward. So that is where I think we have. And that’s one of the reasons I think why our NPS is so high.
Michael Waitze
Yeah, I don’t want to gloss over this at all. Actually, I do think that the experience really does matter. In other words, you can have people tout the fact that they’ve sold 145 million policies. And that’s neat, right? Again, we don’t have to talk about who that may or may not be. But the idea is you’re right, it only really matters when the claim happens. And if the claim is seamless, and if I received my payment, because that’s where the happiness is, you promised me something, you fulfilled that promise. That’s where the trust happens. And in a way, you know this, right? If only 1000 People get a claim that 1000 People are not your greatest ambassadors, because it worked. And the experience was great. But if a 143 million people get it, the experience isn’t good, or there’s no payout? Who cares? Really?
Arijit Chakraborty
No, absolutely. And just to add one point, most of them won’t know also, they bought something. So that’s another thing. So they may not know that way to claim. And that’s where I think a lot of underwriters make money as well.
Michael Waitze
Agreed. I want to talk about some news that you and the team announced at the end of September 2021. So it’s pretty exciting news Cover Genius announced that it secured a Series C funding round of 70 million US dollars. So congratulations on that. That’s great. And I want to set something up here though, if a seed stage investment fundamentally funds an experiment in a Series A funds growth, these later rounds, whether it’s B or C or whatever. They fuel growth acceleration. And you’ve seen you mentioned this earlier, your gross written premium in the past six months triple, which is incredible. And you mentioned these new partners that you have you said 20 of them, which is also big. But what needs to happen after this funding to accelerate that kind of growth?
Arijit Chakraborty
Sure, Michael. So just to add a bit of context, here, right? Cover Genius. What I like about the Cover Genius story that it was a predominantly bootstrapped company to start with. Actually the proper round, the series A round only happened in October 2019 when sort of, we decided to go big in Asia, and I was getting hired at around the same time. And we wanted to expand in us. So the business started five years prior to that. Okay, why I’m drawing this differences, because of sort of the InsurTech companies I’ve built in the past and sort of the InsurTech companies I know, in Southeast Asia or globally as well. The trend has been and this isn’t this is unfortunate. I’m not talking about InsurTech. I’m talking about the whole startup ecosystem, a lot of people feel having large investments is a sign of success, which is not no. I think what I liked about the proposition here is they didn’t dilute the founders didn’t dilute themselves early in the beginning and built a very, very sustainable business to which that revenue getting generated out of the business was sufficient enough to fund the growth of the business. Okay. So that is a that is a big difference. Because what I’ve seen in Southeast Asia as a trend, something gets built, based on the GWP, you get a skyrocket valuation, you try to get more investors, and when there is an early VC entry to any business, it’s more about, you know, loading up the valuation, and you don’t do don’t look at the underlying value of the business. So there is a huge disconnect between what is your valuation out there in the market, and the underlying valuation of the comapny.
Michael Waitze
I could not agree with you more, go ahead.
Arijit Chakraborty
So so in that way, cover genius, I think, build a sustainable business. And we took the series a back only into India, October 2019, to scale the region, which wanted to grow, which is US and Southeast Asia, India. Now, with this new investment, we’re actually further down the round in terms of managing and showing globally our capabilities, our Xcover platform, the large ecosystem partners we have. We haven’t lost a single partner since we have started with them. And that’s kind of a, you know, value add and a brand building we already have, it is more on acceleration. We have doubled up our headcount, actually in the last six months, and we are looking at maybe another significant 50 to 60% jump in terms of headcount. So what we are growing right now, is whatever growth we had, we have kind of tackle the tier one large distribution partner which we can we need to grow a lot with them. And then we are going to the next step on the tier two tier threes, large distribution partners also and come up with embedded insurance. So I think what what his investment is helping us to do is fuel more human capital into the business rather, and then expanding. Why I’m saying this rather than the other way around, because a lot of people actually take initial money to feed into the growth of the tech, our tech platform is already built is already scalable. We are obviously making enhancements and making it bigger and sexier that way. But what we are investing now is human capital for this growth, rather than because it’s a more product oriented company, the product is already there. We are now looking for regional and global distribution partners.
Michael Waitze
I get it, I get it. And it’s it’s a great story in a way like when you talk about this, it reminds me a little bit not exactly, but a little bit of a company called linda.com. Right, which was a learning platform, I think it was started in California by a woman named Linda, something I can’t remember her last name. And that was essentially bootstrap for 10 or 15 years before they took any outside investment money. And then it got purchase. And I’m not suggesting that Cover Genius is getting ready to get purchase. That’s not the point. But the idea that they built this entire tech stack, and this entire business by bootstrapping it. And just actually, when they raised money, they didn’t raise it to like verify evaluation or participate in that side of the business. They just wanted to grow faster at that at that point. And that sounds exactly like what you guys are doing. No.
Arijit Chakraborty
Yeah, no, you’re you’re right. I mean, what, what I like about the two founders is with Gus and Angus, and Chris’s. They want to build a sustainable business and have a global dominance in embedded insurance. Yeah. Rather than looking at, you know, absolute insane valuation and flipping it.
Michael Waitze
Yeah. And, frankly, that’s the way I like to look at these businesses. Because you can see plenty of businesses that build for valuation and exit alone. And at the end of the day, they’re not sustainable at all.
Arijit Chakraborty
You’re right,
Michael Waitze
I get it. Um, look, I think that’s a great way to end this conversation. If that’s okay with you. I think we’ve covered a whole bunch of stuff. And I think you’ve told a really great story. I’d love to thank you, Arijit Chakraborty, managing director for AIPAC and cover genius for coming on and giving us a great update today.
Arijit Chakraborty
Yeah, no, thank you, Michael. Again, it was it was insightful conversation and look forward to meeting you person again. You know, when things open up.
Michael Waitze
Absolutely
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