'We Are Creating A Digital Claims Platform That Could Approve Claims Instantly'
Nishant Jain, Co-founder and CTO, Toffee (a unique digital insurance platform), discusses their unique business model, the need for customized insurance products, their target market and their business goals
What prompted you to start Toffee? It seems to have a rather unconventional business model…
Rohan Kumar and I have been running a product strategy and design firm for over a 12 years. For the last 2-3 years, we've been working very closely with Apollo Munich, in addition to a couple of other global insurance companies, who mandated us to help improve online conversions.
While doing in-depth user research to understand why people don't buy online, we discovered three main reasons -
1. Most insurance products are expensive, comprehensive, and complicated products that are difficult to understand, where an agent needs to sit you down and help you understand the product, and that's an experience that doesn't work online.
2. There has been very little product innovation in this space since the mediclaim days. All insurance companies have basically the same product with minor differences. The comparison sites work precisely because of this, but even they are only able to close the deal mostly on the phone.
3. Nobody is creating and distributing products to the young demographic in their 20s. The perception is that they are not ready to buy insurance as they don't have any fear yet.
We believe that this challenge can be solved through creating innovative products for this age group and distributing through a brilliant digital experience. We came up with bite-sized products or Toffees that cover "micro" events while remaining affordable. These Toffees cover the specific and real risk for this age group - dengue, theft, fitness-related injury, damage while backpacking, pollution-related illnesses, etc.
Toffees or products can now be bought in under 90 seconds with claims typically approved within two hours. We have three Toffees in beta now and plan to launch five more in the next 1-2 months.
Specifically, what unmet need does your business aim to solve?
Simply put, Toffee aims to change the way millennials think about and buy insurance. Millennials don't believe their risks can be covered by traditional policies, which typically will only buy after getting married or starting a family.
No insurance company is targeting this segment explicitly nor has a digital experience to match the Ubers, Swiggys and Zomatos of the world, which Toffee can replicate and even surpass.
What's your target market? Will it be mainly millennials or are you planning to spread the net across demographics?
Our target market is millennials. Specifically, someone from tier 1-3 town between 21 and 29. In other words, someone moving to a larger city for their first job to someone just about getting ready to get married. The risks here are more implicit: commuting to work, taking that first major vacation, dengue season, infectious illnesses, theft or damage of your belongings, etc.
How do you plan to acquire customers? Considering the novelty of your product, do you think a pull strategy will be effective?
We want to build a strong brand that is focused on youth and that understands their needs. B2C is an inefficient and expensive medium to that nowadays. Instead, we are partnering with like-minded brands and communities where millennials already congregate.
We are working with Sheroes, Hero Cycles, 1MG, Loylty Rewards, Procam, and Fitbit to create the brand connect and distribution scale. This also allows us to more deeply understand risks and concerns, equipping us to offer them better products tailored for each community.
At a product level, how are you providing the risk coverage? Have you tied up with general insurers for the same? If yes, who are your partners and how did you zero in on them?
Each product and its risk positioning is carefully crafted keeping our behavioural understanding. Then each product is continuously tested with a sample of users to ensure that the intent is communicated and all the concerns are answered.
We are working with major insurance providers, such as Apollo Munich, HDFC Ergo and Future Generali, to create these Toffees and assume the underwriting risks as well. We have established partnerships with the incumbents, eager to fuel the digitisation of insurance.
How do these products get underwritten? In the absence of benchmarking standards, is this a challenge?
Admittedly, they don't have enough data on this particular cohort from an actuarial point of view. So, there is a lot of guesswork involved for now, but they are willing to take a chance to help prove our model.
Over the next 2-3 years, we hope to collect a critical mass of data to enable us to create exclusive products that are also priced accurately. This will help us drive new products with the companies rather than the other way around.
How will claims experience be managed? Will Toffee be involved at that stage?
We are creating a smart all-digital claims platform that could eventually approve claims instantly. For now, we are aiming to approve most claims in 2-24 hours with money transferred the next day.
Filing for claims is as simple as buying a policy at Toffee. There's a 'Claim' button at the top of the landing page. Once you click on it, we just ask you just take pictures of your medical documents. And that is it.
Once your claim is approved, you will be asked to enter your bank account information for a direct transfer.
Over the next 3 months, we are creating AI-based approvals, where based on your previous claims, credit and social score, the approvals can be given instantly without any human intervention.
What are your business goals for 2018?
Key business goals -
1. Reach out to a million potential customers
2. Sell a lakh Toffees
3. Create a unique brand that will be hard to surpass
4. Process 80% of claims within the same day
5. Partner with a dozen like-minded brands to support our positioning
6. Continuously innovate on products that are unique to Toffee