E-commerce marketplaces Amazon & Flipkart and motor marketplaces CarDekho & Droom and what to expect
Why are marketplaces looking at insurance?
“Economies of scope” – increasing margin on acquired customers §E.g. CarDekho offering motor insurance could increase CLTV (customer lifetime value) by 5%-10% via initial & renewals insurance commission.
Vertical integration – control over CX (Customer Experience) §E.g. Flipkart offering mobile insurance allows them to handle FNOL for their partner carrier – perhaps, an opportunity to delight the customer for future up-sell?
Ability to exercise better fraud controls – unlike insurance co’s which typically rely on 3rd party data regarding time & condition of sales & repair (some) marketplaces have 1st party access to such data §e.g. Flipkart knows more about the phone & Droom knows more about the used cars than their partner insurance co’s
What to expect next? – NBFC licence spree
(Used) car marketplaces are moving further up the vehicle purchase value chain to capture margin on the same CAC (“economies of scope”)
Some opportunities for Indian InsurTechs
Increased appetite for insurance product innovation
Example in motor insurance is Carro (used car marketplace in Singapore) & its pay-as-you-drive insurance.
Asymmetric competition arising from in-house brokerage team pushing insurance products from preferred vendors Examples in motor insurance include Hero and Maruti Insurance brokers who were fined recently 
Mis-selling of insurance products embedded in purchases
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This article does not constitute investment or any other form advice. The author bears no responsibility in the event of financial or other loss arising from actions taken by the reader or any related party on the basis of information represented in this article. The author does not have any financial interest in any firm mentioned in the article above; this article is produced for educational purposes.