This year will be challenging from supply perspective: PolicyBazaar.com CEO

In a Q&A Sarbvir Singh dwells on the current trends in the insurance space and how his firm's business model will change now that it has got a broking licence

The second wave of the pandemic led to an uptick in demand for term and health insurance products, but the supply side constraints proved to be a dampener for the business. Sarbvir Singh, CEO, PolicyBazaar.com, speaks to Subrata Panda on the current trends in the insurance industry and how his firm's business model will change now that it has got a broker's licence. Excerpts:

Q. What kind of impact has the second wave had on the business of the company?

It was similar to what we saw last year. We saw a lot of demand from consumers on the health and term insurance side. On the health side, we were largely able to satisfy the demand because most of the issuance is based on telemedical or on the basis of no medicals. On the term side, supply was a constraint because people did not want to go out for medicals and because of Covid, the reinsurers and insurers were very strict and were asking for physical medicals. So, both the problems came together.

Q. Did tighter underwriting standards impact the intensity of demand for term products?

Last year, the peak of demand for term products was between April-May for us. This year, the demand was marginally higher than last year but issuance of policies has been a problem, mainly due to the requirement of getting medicals done. The demand is not the challenge, supply is. This year is going to be a challenge from the supply perspective. Term insurance will be a tough market from a price and issuance perspective this year.

Q. Will vaccines become an important metric in the eligibility criteria to buy term insurance?

Currently, it is based on segments. What some insurers have said is, if you are over 45 and if you have some other comorbidities then you need a vaccine certificate. It is quite likely that as vaccination becomes more common, insurers may ask for vaccination certificates for issuing policies.

Q. How have guaranteed products and Ulips done in Q1?

Guaranteed products continue to do very well and Ulip sales have been quite strong because demand for them is correlated to the markets.

Q. How will Policybazaar’s business model change now that it has got a broking licence?

Earlier we were a web aggregation platform and only restricted to the online space. With a broking licence, we can operate offline also. Our objective now will be to build an integrated offering, where we will continue to focus on our online business but we will also support our customers offline also. Also, now we can now do point-of-sale (PoS) businesses where we were not present earlier and we can power agents to sell insurance policies. We are still examining the business model we will follow but one of the things that is on the cards is to have our own sales force. Earlier we were a neutral platform between insurers and consumers and now we are clearly the agent of the customers. So, it’s a superset of what we were allowed to do earlier.

Q. Health was the most important segment for general insurers last year. What is the trend this year during the second wave?

This year we did not see a huge demand for covid specific products and insurers are also not very keen to sell such products. Customers have also understood that it is actually better to have a comprehensive policy. So, the demand was mostly for comprehensive health insurance products and the demand was almost at similar levels seen last year.

Q. Is the demand for health insurance sustainable or will it taper down when the covid risk is contained?

This is a multi-year trend. There was a slight increase in the trend last year due to the pandmeic but still less than 5 per cent of Indians have retail health insurance. So, I don’t see this as a one-time thing. Maybe the growth rate in retail health last year and this year will be more than what we normally see but this segment will keep growing.

Q. What is the status of the IPO?

We intend to do an IPO sometime later this year or early next year.