We Are Going To Do Rs 3,000 Crore Of Premium This Year: Yashish Dahiya, Policybazaar
Yashish Dahiya, Co-founder and CEO of Policybazaar.com talks about the company and its evolution, the insurance distribution market, competition from insurtech businesses, and much else in a free-wheeling chat with BW
You started off as an entrepreneur with certain personal philosophies. What have these personal philosophies been, and how have they affected your journey so far?
My core personal philosophy, ever since I was a child, has been this —you cannot truly benefit until you have benefitted somebody else. That’s my number one belief. This philosophy is reflected in hundreds of decisions that I make every day. My second belief is that one has to work hard for everything. If something comes to you without hard work, then you’ll lose it just as easily…. Easy come, easy go. And yes, I believe in extremely long-term thinking—no short cuts, no quick wins, just staying focused on the long term and the big picture. If you ask a hundred people about me, they’ll most likely say the same things— that I am a long-term thinker and always take care of others’ interests, and not just my own.
My entrepreneurial journey embodies all these philosophies. There has occasionally been pressure to digress from them, whether from investors or from employees, co-founders, suppliers… but in all of these situations, I’ve tried to stay true to the maxim of ‘Let’s do something which is good for you and me’. Let us do something which will last. Let’s not do short-term things or lose focus for short-term gains. This has worked for us in the long run... But there’s a catch! You have to stay alive too. The only times when I have sacrificed the long term for the short term is when I’ve had to do so, so that we stayed alive tomorrow. Because in life and business, there will be many instances when you simply cannot survive without making compromises. And yes, those compromises need to be made.
What has been the journey of Policybazaar so far? Tell us about the road to profitability after burning cash for eight long years.
In an Internet-based business, there are no shortcuts to instant profitability; at least not any that I am aware of. From the day I start an Internet-based business, I have to pay rent for an office, pay a salary for my first employee — these are all losses. I call them costs. You cannot possibly have a situation where money starts pouring in from day one. What we did make sure at Policybazaar — and we are quite distinct in this approach — is that if a customer buys a policy worth Rs 10 from us, we do not lose money on that sale of Rs 10. So, we’ll never be in a situation where we would lose more money if we do more business. But on top of these costs, I have IT costs, I have a 150-member IT team. You don’t necessarily have to undertake any of those costs, but if you do, it creates long-term value for your business. And that is the investment that goes into the business. Policybazaar, which is about 10 years old, has consumed $35 million till date. I know that is a lot of money, but the point is that there is a one-billion-dollar valuation sitting on the back of that $35 million. That is a return of almost 30 times that any investor who has invested that 35 million would have received. I am okay with the technology, management, product costs, but I don’t like losing money on each transaction. Because if we start doing that, then there’s no end to the bleed. I think that is the basic philosophy and the guiding principle of the business.
Where is the insurance distribution market headed in the next decade? How do you plan to ride this wave?
There is a clear trend towards warranty protection products, that is, pure protection against death, disease and disability. In 2001, these products made up roughly 1 per cent of the market. Today, they constitute 6-7 per cent of the market. This share will increase further and take up half the market pretty soon…it’s unstoppable. The second trend is a movement towards digital. More people now want to compare products and buy digitally, and they’re showing a clear-cut preference for making research-based, digital purchases. Fortunately for us, both these trends put Policybazaar in an absolute polar position. Today, we are 100 times bigger than any other distributor — both online and offline — when it comes to protection against death, disease and disability. The only problem is that these products still constitute just 6-7 per cent of the industry. But why should it not grow? Insurance has to be about protection. It can’t be about savings. So the industry has to collectively and comprehensively move in that direction. Also, why should you, as a consumer, not get to compare products before you buy? Think about it.
At last year’s BW Life Insurance Summit, you came across as a vocal proponent of pure term insurance and generally not much in favour of traditional endowment policies. Considering that most Indians traditionally still veer towards traditional plans offering safe and guaranteed returns, does this thought process not act as a hindrance to your growth?
Let me ask you a simple question — what has the volume growth in traditional products been over the last ten years? Nearly zero. It is pretty much where it was in 2009. How much has Policybazaar grown? At least 500 times. We’re going to do Rs 3,000 crore of premium this year. You just can’t be commission-centric in your approach. Consider ULIP’s — they didn’t go out of favour because of the market crash; they did so because in August 2009, some new rules came out which basically reduced commissions and made ULIPs good products for customers, but bad for agents! A good product is bought, whereas a bad product is sold. The answer is clear and in front of you. I’m certain that, in a few years from now, most family members would have at least two policies — one health, and one life. If that happens, I think the industry will effectively be transformed. This is the where the future of the industry lies.
What are your thoughts on ULIPs now? Following the 2009 reforms, they became a lot more attractive, but their market share dropped. Where do ULIPs figure in your overall strategy and product mix?
In 2009, the ULIP distributors’ commissions were dropped. As that happened, distributors stopped selling them. And people stopped talking about them. And somewhere along the way, “ULIP” became a bad word. Even today, very few advisors want to call a ULIP a ULIP, although it may be a great product. I think it may be best to change the name of the product altogether, as the name is tainted. Today, there are ULIPs which are much lower cost than even direct mutual funds, and they perform well too. But customer awareness simply isn’t there, because they have small in-built commissions and so nobody is willing to distribute them.
Are you concerned with the proliferation of so many tech-enabled insurtech businesses that are also armed with war chests full of VC money?
See, eventually, whoever gives the best customer value is the one who will win. We are focused on doing that. We will keep doing that. Let us see if somebody can do it better.
How has your own tech platform evolved over the past five years? Have you leveraged new tech developments to improve your proposition, and, if yes, how?
Today, nearly 60 per cent of our motor, two-wheeler insurance and travel insurance policies are already sold through a chatbot — which is fantastic. We are also incorporating deep machine learning in our voice analytics — drawing upon all our available voice archives from the past 10 years and using those inferences to predict claims from customers who are coming online for the first time.
What led to the signing up of Akshay Kumar as your brand ambassador? In what ways does he resonate (as an individual) with your group’s customer policies and principles of doing business?
I wonder if he’d feel the same way — but I believe that Akshay is very similar to me and to the company. We’re both vocal in our opinions, and tend to say things that others are afraid of saying out loud. Like him, we say state ground realities and important truths in a straightforward manner, without bothering too much about the repercussions. And as you must have noticed in all our adverts, we add a fun element to our communications because we don’t want to be perceived as “boring”. To me, Akshay Kumar embodies Bollywood. While there are many great actors like Aamir Khan who can make very serious statements, they somehow forget to be as funny as Akshay Kumar. He tends to have more of a human touch to him. So we zeroed in on him for these two qualities.
You’re a self-confessed fitness freak. As an entrepreneur, how important is it to maintain an optimal balance of physical, mental and spiritual fitness in order to stay ahead in the game of business? How important is this regimen in your life?
See, it’s almost as important as life itself. Fitness is one of the most important things in my life, because of a simple reason — it makes me happy. As I am approaching my mid-40s, somewhere I am getting fitter, ‘higher energy’, more active, and more alert. We tend to think that high grades and marks are the be all and end all of life, but we forget that we are embarking on a 40-year career. Most of us start our careers in our twenties and retire after 60. Most people, who are unable to continue their careers beyond their mid-40s, if you notice, are also physically unfit. That is the reality. The point is if you are physically unfit, you can’t cope with the stresses of work and that means you can’t add value for long. My point is very simple. Physical and mental fitness helps you in the long run. In the end, how much does it really matter if I was an engineer or a doctor or an MBA? What matters is this — do I have the energy to keep working? Do I have the energy to energise others? Am I a nice person? Am I balanced? Do people like working with me? Because if those things are not true, nothing else matters. If you’re physically and mentally fit, you have a massive advantage over those who aren’t.