EP 162 – Varun Dua – Founder and CEO at Acko – Before Malls Could Happen, There Was eCommerce


Michael Waitze worked in Global Finance for more than 20 years, employed by firms like Citigroup, Morgan Stanley and Goldman Sachs, primarily in Tokyo.  Michael lived and worked in Tokyo from February 1990 until December 2011.  Michael always maintained a particular focus on how technology could be used to make businesses more efficient and to drive P/L growth. Michael is a leader in the digital media space, building one of the biggest and fastest-growing podcast listener bases in the region.  His AsiaTechPodcast.com show has listeners in more than 170 countries and his company, Michael Waitze Media produces some of Asia’s most popular podcasts.

Varun Dua

Varun Dua is the Founder & CEO of ACKO, a technology-first insurance company that operates in the P&C space. Varun has extensive and diverse experience in the insurance industry. His journey as an entrepreneur began in 2011 with Coverfox, one of India's early insurance broking firms. Coverfox broke into a sector dominated by traditional insurance players and agents by leveraging technology to automate and simplify the insurance journey for consumers. Varun set up ACKO in 2016 with the intent of connecting insurance with the digital economy, making it accessible and seamless for all customers.

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The Asia InsurTech Podcast spoke to Varun Dua, the founder and the CEO of Acko, about what sets Acko apart from other InsurTech players in India and how the insurer is changing the game for health insurance.

Here is the transcript of our conversation.

Michael Waitze 0:00
Okay, we are on. Hi, this is Michael Waitze. And welcome back to the Asia InsurTech Podcast. This is the only podcast in Asia focused on insurance that gives entrepreneurs we’ve got a great one with us today, thought leaders and investors, a platform to discuss how technology is reshaping the insurance industry globally. We are happy to have Varun Dua, the founder and the CEO of Acko. On the show today. Thank you so much for doing this. I trust you are well, how are you today?

Varun Dua 0:30
I’m doing good. Back in office. That’s awesome and great to catch up with you, Mike.

Michael Waitze 0:34
I love this idea that being back in the office is a thing. It’s been two and a half years of when am I ever going to get to see my chair again, kind of thing? Right?

Varun Dua 0:44
It just like sitting sitting at home all day on with Zoom calls, staring at a screen I think, at least personally, it’s gotten to me. So just coming back to Office meeting with folks is quite refreshing.

Michael Waitze 0:56
I mean, frankly, I think it’s gotten to a lot of us, we could spend an entire hour talking about just like the mental health impact working from home. But we’ll leave that for a different podcast. Before we jump into our main part of this conversation. What do you think is the biggest trend in insurance and InsurTech in India, and frankly, by extension, the rest of the world?

Varun Dua 1:16
India is at a strange place right now, with regards to insurance. And when I say strange, it changed in a good way. Because everything sort of, you know, happening at the same time. The strange thing about India is that before people could get telephones, they had mobile phones before malls could happen there was e-commerce, you know, and before really technology can disrupt insurance or find new efficiencies or new models. Everything’s growing together, right? Even the traditional businesses are growing, even the agent force is growing, like everything’s happening simultaneously. So as far as India is concerned, I think what we get is, is completely new models. Because the ecosystem is developing in parallel, the core sector is growing, and technology is growing. So the solutions are very, very different. They don’t, you know, have that sequential, sequential way of developing right, in some sense that for 50 years, you had agents and banks doing it. And now suddenly, there’s technology, distribution, embedded insurance, all of that. All of it is just happening together. So there’s a lot of innovation across the board and people trying to experiment with various models. It’s just like such a hodgepodge, such a mix, but very vibrant. I don’t know whether just this gives you a sense of direction where India is.

Michael Waitze 2:29
It’s such a great answer, and I’ll share something with you. Normally, what I like to do is I like to take something pithy that my guest says, right, so something that’s very easy to understand, but forcefully explanatory, and use that as the title for the episode. Normally, it doesn’t come so early. But I love this idea of before there were malls, there was ecommerce, because it’s something that’s so easy to understand what we spent a lot of time on this show talking about digital transformation. But digital transformation in India is kind of like a different animal. Right? And because of its vastness, and because of the difference of all the states, tier one cities, tier two cities, tier three cities, and in the suburbs of those are the exurbs of those. It means the development, particularly from a digital perspective of all of these industries, insurance included, is different. Is that fair?

Varun Dua 3:18
Yeah, So India is like, I would say about 20, 30 different cohorts of consumers. And they behave differently, they have different motivations, they have different levels of awareness, they have different levels of digital access. So it’s almost like and there are different languages, so it’s, it’s, you know, so you’re really solving for specific cohorts. And in India, I think it’s pretty critical when we’re running a business to really pick who your customers is because they’re very different customers. There probably the top 50 million people in India are as good as the Western world in terms of their habits and their consumption and, and earnings. But when you go to the bottom, you know, maybe 300 – 400 million people, they all have digital access for the kind of digital access they have a very different from the digital access you and I have, you know, they’re their digital access is the neural new to the internet, they consume a lot of content. They consume a lot of local language content, but they don’t yet transact. So you can educate, but monetization models, whether insurance or something else are very different.

Michael Waitze 4:21
Yeah, so this is a really good point, right? We spend a lot of time talking on my FinTech and other podcasts about financial literacy, but as a subset or a subset of that there’s this idea of insurance literacy as well. Right? I mean, if you look at the tenants for great insurtechs that everyone’s trying to simplify this process, right and make it more transparent. Is part of that simplification process also engaging with your potential clients and educating them about the product and about the necessity as well? Is that if that makes sense?

Varun Dua 4:53
Yeah, I have I have a sort of a completely different take on it. And and I think, honestly, I feel there are very few people in the world. Forget whether it’s India or depending even even my friends who are who had called from a similar background, similar cultural context, similar income levels, like really who wants to learn about insurance? Nobody does. Right? Like, frankly, you know, I think people need it, they understand they need it, at least after a certain point. But it’s just one of those things which you either procrastinate or find boring, or don’t you know, like, spend too much time on it. One of the things at least that at Acko we trying to do, and I don’t know, I don’t think we’re successful yet, is how do we create a suite of services or create some gratification. This is one of those products, which doesn’t have any gratification, right? For a long time. The gratification only happens when there is a mishap of some sort. And the mishap and the gratification really don’t go together very well, because they’re upset when the mishap happened, right? So it’s a it’s a difficult category to create impulse. It’s a difficult category to create some ongoing gratification. And I think that’s deeply wired in human behavior. You know, I don’t think we most of us are not very good long term planners, we all like instant gratification. And how do you get this category close enough? If not, it can never be a highly gratifying category. But is there a few things that we can do with the customer so that there’s some impulse and some gratification which sort of helps in the velocity of decision making for consumers around this? Otherwise, it’s just one of those boring things that you can simplify, you can make it transparent. Doesn’t make it interesting. If you have to make it interesting. Or if you haven’t have to make it worth my while, then I can’t be preachy. I can’t be saying you’ve got to do this. It’s important for you. Yeah, screw you. I’ll do it. That’s how most of us are, I’m sure there was like a small percentage of us who are good planners think about their financial lives very, very meaningfully. But most of us are not like that. And that’s the swats to solve for.

Michael Waitze 6:52
So if before and you mentioned this earlier, if before, it was agents, banks, bancassurance through to consumers, if you go direct to consumers, right, and it’s not just insurance that’s doing this. ecommerce companies, as you mentioned before, right factory right to consumers are thinking about this. And if an insurance company is the factory where insurance gets created, well, then it’s similar, right? In that sense? But if you do do what’s called DTC direct to consumer, how does it change this? And then how does that engagement model also change? If that makes sense?

Varun Dua 7:25
Yeah, I think D2C is probably the first sort of layer to build on top where you at least start talking to your own customer, at least on the insurance side, the problem in India has been that the distributor or whether the bank or the agent owns the customer. And when they own the relationship, you don’t even have sort of opportunity to experiment, opportunity to figure out what will work what will not work, but because your consumer starts becoming the distributor, at least for in India, that’s happened. I don’t know whether whether that’s happened across the globe, I’m quite sure that’s the case in some geographies where you know your consumer for the insurance company also the factory really becomes the intermediary because you want to take care of his margins, his commissions, his lifestyle, his training, so that he sells more for you and the end customer sort of starts losing focus. As far as for your business design is concerned, your business design starts gravitating towards fulfilling the intermediaries life, which I’m not judging whether right or wrong, that naturally gravitate to that right because that’s, that’s your core consumer, I truly believe in that business. The core consumer is the intermediary, not the end consumer. But when you do the D2C model, you’re really at least saying how every day of my life that I spend my team spends is actually really trying to figure out what works for that consumer versus trying to solve for what will work for the intermediary? I think that breadth itself philosophy will breadth, even before you get to the tactics of how do you own the relationship, the data, the engagement and all of that? I think it’s fundamentally a choice that whether Do you want to solve for two people which is the end consumer and your intermediary? Or do you want to solve for just the end consumer, just having that flexibility that I am only solving for the end consumer, I really don’t you know, care whether the intermediary is aligned with my product. So one of the things that we say on our website, which I can see on your background is zero commission, you know, and and that has, you know, created sometimes an upsurge of the distribution committee community actually lashing out at us, you know, in India that you know, the zero commission is not in great taste, you know, it hits at our income earning capabilities, but we okay take the fight on, in some places, intermediaries are necessary, I think they explained the product to play a role. But in simpler products, probably the role is not that important. I think that fundamental choice of the company has taken which is to say, I will solve for the end consumer gives you the play area or the playground rather to start engaging, solving, figuring out what works for the user doesn’t work for the user. And that I think is a is very critical.

Michael Waitze 9:59
So in my mind, right, and maybe I just have too much information, something like auto insurance should be really straightforward. I have a car, it gets broken, or somebody hits me or I hit somebody else, I get insured. I don’t think I need a lot of explanation for this. And there aren’t a lot of exclusions either. So to be fair, and I’ve been involved in, you know, the finance business for 20 something years, almost 30 years. Yeah. So I understand like writing automated processes to take care of things that humans don’t do well, or don’t need to do to free them up to do the things that are much more valuable add. So like, I’d love to have a conversation about health insurance, which we can do. But car insurance, I feel like, you know, I’ve got a 1974 Ford Pinto, or whatever it is, I just want insurance for it, I click the button, I get my insurance. I don’t need to conversation. Health insurance is more complicated, no matter how much you want to simplify it. So I get that. And this comes back to the different cohorts you want. So you can have the argument with people about zero commissions. It’s the zero paperwork part in a way. And also, but also, there are plenty of other businesses that build their entire, like model around zero commissions. You see it in the financial asset trading business, traded stocks, pay no commission, there are other ways to get money anyway, go ahead. I want to talk about this zero paperwork thing, too. Yeah.

Varun Dua 11:19
Yeah. So before I jump to zero paperwork, one of the ways, there’s a colleague of mine, and and we were when we set up, we were talking to her father was really just having a coffee with a colleague father, we were trying to explain our direct to consumer insurance model to her father, who’s always bought from agents. And, and and we just just trying to explain what is the value that we will add? And, you know, we struck gold with a sentence that he said, he said, also, you’re going to sell it at wholesale price, you know, because you’re directly selling from the factory, it had never occurred to me that you know, that the probably much older gentlemen, you know, much older gentlemen, but that’s that’s the way it sort of the argument settled in his head, you know, oh, this is factory price insurance, it was wholesale, wholesale price insurance, because you’re just cutting out, you know, the chain. And so, so different people have different interpretations, but for him that, you know, older generation, the real value was, I’m getting it at factory price.

Michael Waitze 12:17
Yeah. And to be fair, without naming names and company names, but I think you’ll know when people will know about whom I’m speaking, but I interviewed the founder of one of the largest online distribution companies in India a year and a half or so ago. And one of the things he said to me was, I was in London, I was in a consulting business or some other kind of business, I can’t remember. And I looked around and all the really rich people I knew, driving fancy cars, were in the insurance business. And I just thought, yes, the business I need to be in. The implication was that the commissions were high and my thought back then was, well, if you can remove the commissions or have the commissions or third the commissions Well, that should go directly to the consumers. No?

Varun Dua 13:00
Yeah, it should, it should. And, and I feel the intermediary, like you mentioned health. It’s a complex product, we can simplify it to a point, but really, you know, you know, beyond the point that it just gets hard. I think intermediaries or somebody who can explain the product, or help me make those choices is probably required or critical. But I think what’s happened over a period of time is the models gotten so corrupted, the commission layers in India are sometimes obnoxious.

Michael Waitze 13:31
I think it’s like that everywhere, right? I mean, you know that because you’re in India, I’m in Thailand, like in United States, it’s up for grabs, right? Anyway, go ahead. It’s just Yeah.

Varun Dua 13:39
So it just seems like, you know, if that value structure could just be passed on to the consumer, and the guy whow is doing the advisory, or the intermediary is probably, you know, controversial things, working a little harder for his money. In some sense. I think it will do good to all all all the stakeholders, in some sense. But what we’ve seen is like coming to the zero paperwork part. And that’s what I meant, when I said that we’ve resolved for you to pick the consumer cohort really well. The top 15 million people in India have high income levels are probably more spoiled in terms of services than their western counterparts. Because once your income in India, you know, crosses a certain threshold, you live live a very lavish life because things are relatively cheaper, right up in India, like anybody with my income levels are my friends are which is really, okay, income levels, will probably have three, three domestic staff at home, they’ll have a driver, you know, it’s just you just crossed that threshold. Where, you know, unfortunately, fortunately, whatever you call it, labor is cheap and therefore, you got people to do things for you, right, in some sense now.

Michael Waitze 14:52
There’s a GDP per capita trigger. That makes people interested in financial services and it’s not just your opinion, I was talking to Greg Krasnoff, right, who is the founder of Tonic Bank, I think they just announced $100 million raise. He’s building in the Philippines to great success. But one of the things he mentioned to me is that as GDP per capita gets above, I believe he said, 3500 or $3,750 people have disposable income, they think, what should I do with this? And you’re right. It may be Western standards. It’s not that high. And to be fair, in India, we talked about this. Mumbai has 10 – $15,000 per cat GDP per capita, right? Income, yes. Where India itself only has like 1900. Right. So Yeah, different. But once that trigger gets hit, everybody wants financial services. Yeah.

Varun Dua 15:42
Everybody does. And today, if you look at that cohort, which is probably crossed that 5000, 8000 10,000 mark, in some sense, they they are digitally savvy to do paperwork makes sense for them. They believe that they can do their own research, they don’t trust the advice that the intermediary is giving them, they’ve raised the intellectual and the income threshold, to say, I want to save time, I want to save money, I can do my own research, I trust my own research compared to you know, what some, you know, agent is telling me, so, you know, psychologically, income wise, that’s really who, for lack of better words, is the first phase of who an Acko customer is, yeah, we’ll be solved for the rest of India, probably yes. But the first cohort is easier for us to solve. That’s what we’re solving for. And then we, you know, try and differentiate our offerings over a period time.

Michael Waitze 16:33
So you’ll love this when I was at Morgan Stanley, right? I was in the fixed income trading desk. And even before I was there, I didn’t do sales there. But every year Morgan Stanley, you get a bonus, they’d say, if you take part of the bonus, and invested in some in anything for your 401k We’ll match it. And then they’d send you a list of the things you could invest in, which were all Morgan Stanley funds. So if I wanted to invest my money in an M Sam fund or something outside, not possible, right? And in a way, you’re saying the same thing. So it’s not just the insurance industry, it’s the whole financial services ecosystem, where it’s like, yeah, just take our stuff. But you’re right, if I can do my own research and understand all my own stuff, particularly for simple products. I read through it myself. That’s the D2C thing. No.

Varun Dua 17:16
Yeah, and insurances are different, you know. So it’s very different financial services category. And it’s, you know, it’s closer to a bank, and then then to probably wealth or whatever, there’s just too much research on, you know, saving money, which funds to go for what’s performing what’s not performing. And there’s volatility in the decisions, you want to switch portfolios, you want to figure stuff out, you want to keep optimizing, it’s an optimization problem. Whereas an insurance, it’s a one time reliability, trust problems. And if this stuff is too boring, I don’t like to watch my insurance go up or down every day, what I want is I want somebody reliable, I want somebody easy. And once I find that, you know, I just want to, and I use this word with the team very often saying, Hey, we should consumers should want to dump their problems onto us, I think you guys are okay, you guys will not, you know, you guys will be easy when the time comes, you know, just dump it on us. And that’s a one time you know, if you dump it on us one time, you have that long term relationship, because it’s not like you’re buying health insurance every six months, you probably buy it once a lifetime, maybe up, you’re covered, you know, once you cross a certain age threshold, so they are very long term decision, once you find a auto insurance provider who you’re comfortable with. And as long as we are not trying to cheat you by really upping the prices, you don’t want to switch, you know, you’re like I’m okay with this, right? So I don’t want to keep optimizing. So what we’re really solving for is how do you get that trust, reliability and simplicity, that customer saying, Hey, I don’t want to look at this again. So the one metric that we don’t look at it, what is my active users, I don’t want to look at it because there’s no, you know, maybe I need to get get those users to be active for other use cases, say, Hey, can we help you with cars? Can you help you do something around your car and just build a little bit more engagement with the brand, but as far as the core insurance part is concerned, we’re like, okay, just just do it and forget about it.

Michael Waitze 19:06
So this may be a little controversial as well. And I hadn’t thought about this until you said it. But do you think insurance reaches a point where like other financial services that actually becomes tradable?

Varun Dua 19:18
Portable, maybe, I don’t know tradable is I think it’s just a very confusing concept because you need to have some sort of interest in the asset or the life for or something that you’re insuring that’s like the fundamental principle, right? I can’t come take out life insurance and you in some sense, or insure your car, but can I put maybe, but I haven’t thought about it.

Michael Waitze 19:43
Yes, I kind of went the other way around, right. So right now, if you’re a capacity provider, right, so if you’re a reinsurance company, or you’re an insurance company, you’re full stack so you’re providing insurance and underwriting the insurance. You’re taking your money, potentially from an asset management company that you run, you take that money and You use it to invest to then fulfill your liabilities on the other side, right? So you create this gigantic balance sheet. But is there a way to make that part of it tradable, so that you can disintermediate some of the risk? I don’t necessarily wanna talk about blockchain. But you know what I mean, we’re like, everybody can invest. Yeah, tokenize, that risk on the other side. So that if you get into the health business, the problems are not just dumped on you, but they’re dumped on all the people that think, Wait a second, I’m happy to participate in this risk as well.

Varun Dua 20:26
Yeah. So So whether it’s some sort of peer-to-peer or some sort of, you know, risk sharing mechanism or, you know, income generating mechanism by participating in the risk, whichever way you look at it. Frankly, I don’t think I’m very clear with how that could go whatever little I’ve seen in China, of some of this thing happening to some degree, is just fallen into complications. I think it’ll happen at some point, whether it happened in our active lifetimes. Yeah, you know, who knows, it’s tough to say with all the metaverse and the NFT is and all of that God knows what’ll happen. Some some of the stuff I just don’t understand what’s going on. I feel very alien, when some 25 year old founder comes and talks to me about hey, you know, this thing, I don’t even know what you’re talking about I need to Google stuff. I think in some world, it may exist. But But I think we still kind of from an Acko perspective, building it out fairly. Yes, we’re using technology to underwrite better provide better services, but still, the philosophy of the business is still rooted in old world owning the user relationship, providing great services, you know, and building that trust. I think that puts us in a place, I think what we need to look out for is if there is lateral disruption happening, because of some of these structures breaking on risk, like you mentioned, those, those could be the models that, you know, potentially disrupt us, compared to what we are trying to do to the traditional intermediated world where where the whole risk sharing structure changes, it becomes participative, or just something else happens. When will it happen? Not so sure we keep reading about it. China seems to always be at the forefront, they push the limits, but then they you know, they do also quite knee jerk pullback. So it’s a little little, I’m not sure.

Michael Waitze 22:22
But they get nervous when 100 million people sign up. I can’t remember the name of the company, but they’re like, Hey, let’s just show the risk. 100 million million people sign up on the government said, maybe not. Let’s not let’s not do that. Yeah, yeah. Yeah. But so you’ve been in the insurance business for a while, like more than a lot, right? So you’re not new to this. But if you look at a bunch of surveys, in 2021, we’re not that far into 2022, we can’t talk about last year, I think it was Willis Towers Watson said that more money was invested in, in even in just like the first three quarters of 21 that was invested all of 2018 and 19. Why does everybody want to be in this business? Even people that haven’t been in the insurance business? Why do they want to be in this business so badly?

Varun Dua 23:04
Yeah, I think it’s one of those, you know, sort of, it’s one of those businesses, which is probably and it’s not a new narrative, I think, I think it’s been written multiple times about, you know, this narrative is probably been written about multiple times that it’s one of those businesses where, you know, old structures have continued to spin value without really adding too much value. Right? And, you know, you’ve got companies who billions of dollars, you know, supremely inefficient, the insurance company that’s supposed to be probably the greatest on data, you know, it’s supposed to be theoretically but they are not. Like, I think ecommerce companies or payment companies or any other couple of verticals, or, or even stock stock trading company that miles ahead on how they use data for either pricing, or understanding risk, or consumer behavior or conversion rates, or any of these pieces, right. So, and this is like one of those industries, which has been a money spinner with very high regulatory modes. So it’s like one of those old world businesses where people are saying it’s too complex for you that you know, the regulations are just remained a nice insulated money spinner for a coterie of people. And I think that’s what’s you know, getting to it, in some sense that, you know, this is one of the big bastions, which are fully not unlocked at as yet, which is why it’s interesting, right? If even the US which you would consider at the forefront of innovation and really new models coming up, it’s only in the last four or five years we’ve really heard about new kind of insurers coming in or tech based insurance coming in, you know, everything’s happened Robin Hood’s happened many years ago, lending happened many years ago. Lots of payments has happened probably with as long ago as, you know, PayPal or any of these pieces, but on the insurance side, I think till about half a decade ago or five years ago, you and I probably wouldn’t be able to name five companies.

Michael Waitze 24:57
And I want to tell you, I’ve done almost 200 episodes of this show. And India is the pioneer and the hotbed of innovation in insurance and InsurTech. Maybe it’s hard for you to say that because you’re there. I’m telling you from the outside, just looking at every country. There’s so much stuff coming out of India right now. It’s actually pretty amazing. And I actually do see other countries copying what’s happening there. We can go through what some of those things are. But I’m amazed. And you probably don’t know this, but 23 or more percent of our listeners are in India, and they care. That’s why I love having these conversations with businesses that are in India, because the population of India actually does care a lot about insurance. I wanted to ask you this, too, like, a lot of the CEOs that I talked to, across all verticals say the same thing to me. You know, when I founded the company, there was a certain idea of what I had, about what my day to day was going to be like in the things in which I was going to be involved. And then they, when they talk to me, they say, I can’t believe the stuff that I need to do on a day to day basis. It doesn’t fall into any of the cat, like, do you see that? It’s anything that surprised you as well, for the stuff you get involved with? You know what I mean?

Varun Dua 26:18
To some degree, sometimes, yes. But I’ve had a very, you know, sort of, you know, sequential journey to this. I, you know, I was an employee at AIG, when they set up shop in India, then I sold software to insurance companies, then I did a broking business, and now we’re manufacturing the product. So I’ve just been seen it from various angles. So for me, you know, I really didn’t have a set pattern of you know, when I set up this company, this is how I’ll do, or this is what my day is going to look like, I really don’t think I imagined that well, for me, it was just like, when I was working, working as an employee, I was saying, Hey, you guys are not looking at this, you know, what, why can I figure this out better? Okay, that these guys are really struggling on technology. I think they don’t know how to use technology, let me let me sell them technology. But that was my first sort of, you know, thought process. Said, Okay, I’m the enabler here, you know, they it’s still not much is changing. And, you know, not much is changing, maybe I should sell the product, I should go from B to B to B to C. And that’s when a broker business happened. Hey, again, not much is changing, you know, because it’s the same, same product. And I’m just like listing it online and try to make it easier for people maybe, hopefully, but not much is changing. And the next step to me became like, we need to control the value chain product manufacturing, pricing, claims, so on and so forth. So for me, it was always like the next next step, like, how can I get better? And I think it continues to this day that Hey, what’s that next step? Of course, along with that comes the baggage of, you know, regulations, hiring, you know, compliance and bunch of these pieces. I think it’s gotten lighter over the years, because we’ve managed to get some really able leaders, I think we’ve been lucky with some of these guys really taking the taking the load on and they’ve been cultural change agents, pretty much even the way I think about some of these things. But I don’t have a set ideas. I think I’m pretty reactive, like, hey, this could be better. So what’s the next step?

Michael Waitze 28:14
Do you want to talk a little bit in more detail about the health insurance business and how Acko is like addressing this differently maybe than some of the other people in the market?

Varun Dua 28:22
Yeah, I think that two things. So in India, the indemnity market, you know, people, people don’t buy, you know, fixed benefit covers or, you know, diagnosis base.They want a cover, which like pays the hospital bills, that’s the product that consumers understand. And that indemnity product, there’s no EMR, there’s no way to get, you know, sort of digital records of people’s health. Okay, so everything really, it’s happening in pockets right now. Especially, there’s a government initiative called national digital health mission, where potentially everybody is going to get the health ID in India, a single health ID and that they would they would overlay on top of that the consent framework, so that I can share my medical records with a doctor or hospital or an insurer or practitioner based on consent, I could just ship my records, just on a consent. So that infrastructure layer is getting put up. I think it’ll take four or five years before it becomes mainstream. But but at least at least putting it in place with the right building blocks. So India, I think, I think just before I jump into health insurance. India, then some things really well, yeah. Which I’m, you know, quite fascinated about there is an India stack, the government owns a public utility called India stack and businesses can plug into it, this consent based framework, you know, so so it just data moves freely, but with with the right piece, so I think those will really help adoption because today what’s happening in health insurance in India, because in the lack of this infrastructure, everything’s like, the product itself for indemnity comes with like, a million conditions, you know, they like we will not cover this for the first four years, if not cover that for the first two years, you know, or you have coverage of 1 million rupees, but for these 10 diseases or conditions, we will pay only, you know, half of it, you know, is this impossible? Like if you asked me, I can’t go through after being like 15 years in insurance. I can’t go through a product and say I understand. Yeah, no,

Michael Waitze 30:22
I just bought health insurance. So I get it, go ahead.

Varun Dua 30:25
Yeah, so it just doesn’t work at that level. And finally, people resort to, Hey, my friend said this product was okay. So just like maybe, you know, okay, by and large, I have something. So I think that’s one problem. And that’s what also causes the procrastination of decision making, and also cause a lot of heartburn like admission, probably the lowest NPS businesses in the world. Maybe. I think I read somewhere that the NPS of the inshore health insurance business is like 14, or something globally. And it’s bound to be right your product is like that. And plus when when you’re upset, or you’re next is in the hospital, you get deductions on your bills, and like you’re like, I don’t get it, like Why Why am I getting? So I think we’re trying to solve some of these, you know, very, very basic, basic problems by saying can we underwrite better, we will have a sharper underwriting criteria to get you in, or once you’re in its red carpet, compared to risk mitigation being built into product design and claims. That’s why a different way of looking at it philosophicly. Today, the way the industry works, or products, if the risk mitigation is built into the product design, I won’t pay for these conditions. I won’t pay for this. I won’t pay for that, because you’re trying to mitigate common conditions.

Michael Waitze 31:39
Yeah, before something happens. Yeah, before something.

Varun Dua 31:41
So the risk mitigation is kind of built into the product design. And I have too much arbitrary decision making power when the bill comes up from the hospital to say, this line item is not payable, because ABC or you know, with with COVID, we’ve seen in India, like even if you’re going in for non COVID treatment, there is COVID protocol being followed, which is, you know, another 20% of the bill, the nursing staff is wearing PPE kits or changing gloves where far too often or, and all of those consumables get built and insurer just say, Hey, I’m not paying for this, you know, like, and the consumer sort of left in the middle, right? Like, am I not my problem, right, that COVID happened, I’m not even going in for COVID treatments. But because these are new protocols and hospitals, and they have to take extra care that gets added on to my bill and insurance reveals debate. So I think what we’re doing is saying, hey, select the customer better, right upfront first operate in a certain cohort. So they’re self selection, we’re not operating in the whole of the country where infrastructure services fraudulent hospitals exist in parts of the country, which collude with, you know, make up some fake bills, we’re not operating in that cohort at all, for starters, and keep the underwriting criteria input criteria sort of stricter. But once you’re in, it’s, everything’s covered day one and no reductions on your bill. And the only risk mitigation that we’re trying to do is that he is at the point of coming in, or underwriting you and taking you on our books, if we feel that you may have some health conditions, the only condition we want to put on you is a copay, you know, understand saying, I’m not going to go disease by disease and say this covered is not covered this may be covered in this, you know, because this is an if then buts analysis is just too confusing. So what we’re saying is, hey, we’re not sure so sure you’re in great condition, you might have some health problems, what we can offer you is a 30% copay product, you will always have to pay 30% of your bills, take it or leave it, you know, in some sense, but not really go line item by line item and say, I won’t pay for this, and I won’t pay for that. So I think that’s the fundamental thing that we’re trying to do first, and I completely we’re aware that it will work for only a certain set of the population, you know, it won’t work for a large part, but that certain part of the population is big enough to create a big business. Is it big enough to solve India’s health insurance problem? The answer is no. I think that’d be probably the second second part if we survived the first part and do the first part well.

Michael Waitze 34:04
Yeah, I got it. But I mean, it’s a big it’s a big difference in the way that other businesses like this are being run, right, because you’re focusing on a specific cohort as opposed to, like you said, trying to solve the entire problem. Very interesting. Okay. Look, I think this was a fascinating conversation. I don’t want to take up any more of your time. Varun Dua, the founder and CEO of Acko, thank you so much for coming on and doing this. I really appreciate it.

Varun Dua 34:26
Thank you so much. I had a great time. I look forward to catching up again.

Episode 226