insurance is as low as 0.29 per cent of GDP. Ayushman Bharat has provided health insurance to the households below the poverty line. But, the middle class remains largely uncovered.” Now demand is skyrocketing. So what’s changed? In a word: COVID. “Most people didn’t think about insurance. They didn’t want to spend money on that. Also, per capita income is low, so most people didn’t have the liquidity. What COVID-19 did was change this behaviour and mindset,” says Rohan Kumar, co-founder and CEO of Toffee Insurance, an insurtech startup in India that designs and offers microinsurance packages. “For most consumers, it’s still a push product,” Kumar adds, “but with a heightened sense of mortality, increased chances for hospitalisation and associated costs, and the lack of COVID infrastructure, the need for having some sort of protection has been amplified.” Toffee’s focus audience is customers below 35 years of age with a family income of more than INR 50-60,000 per month – so, predominantly, the Indian middle class that hadn’t bothered about healthcare insurance products in the past. Through its innovative, customer-centric, contextual microinsurance products, Toffee had successfully sold bite-sized insurance policies to more than 1,15,000 Indians, over 80 per cent of whom were first-time buyers, even before the pandemic hit.
IT’S THE PRODUCT, STUPID! Startups like Toffee Insurance are taking a fresh look at India’s insurance scene and disrupting it through sharper product designs, relevant pricing, and a stronger focus on customer necessity. Says Kumar: “Everyone was trying to solve the distribution aspect rather than solve the product problem. So, your offline audience, which is probably a 90 per cent chunk of the population, continued to be left out.” Toffee identified three fundamental issues with the Indian insurance sector. Firstly, the distribution problem is
Most people didn’t think about insurance. Per capita income is low, so most people didn’t have the liquidity. What COVID-19 did was change the behaviour and mindset Rohan Kumar, Co-founder & CEO of Toffee Insurance
actually a product problem because there was no innovation and the old-school products were extremely difficult to understand. Secondly, these legacy products were all-encompassing and had unnecessary features, which meant they were covering a large variety of risk profiles and were therefore expensive. And, finally, there was limited access to distribution channels. So, Toffee worked with insurers to create products that covered single events that occur with the highest frequency, and sharpened their distribution. “We focussed on typical conditions for which most people get hospitalised, including diseases like dengue fever, malaria and chikungunya. “We developed a product for those who ride a bicycle to work. We offer coverage for people who are on the road most of the time – like Uber drivers and food delivery staff. The products became very easy to understand, product prices reduced drastically, people were able to relate to it, and it all became very easy,” Kumar explains.
Issue 5 | TheInsurtechMagazine
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