E-commerce marketplaces Amazon & Flipkart and motor marketplaces CarDekho & Droom and what to expect
Flipkart‘s entry into life insurance, in partnership with Aegon Life, signals that e-commerce (& motor) marketplaces might be the next growth opportunity for InsurTech in India.
Amazon has already forayed into insurance with its investment into Acko and with AmazonPay which will begin insurance distribution shortly (corporate agency licence).
Whilst e-commerce attracts attention, motor marketplaces will be focusing on insurance too: CarDekho launched InsuranceDekho (already at break-even) under Ankit‘s leadership; they’re an early mover
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
Opportunity
Increased appetite for insurance product innovation
Example in motor insurance is Carro (used car marketplace in Singapore) & its pay-as-you-drive insurance.[3]
Threat
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 [1][2]
Mis-selling of insurance products embedded in purchases
Disclaimer
Views expressed in this article are my own and do not represent those of Accenture, its management, its employees or its affiliates.
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.
For any further queries or complaints, kindly email me at rahul.j.mathur@gmail.com or r.d.mathur@accenture.com
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