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A chance meeting with an auto-rickshaw driver in 2008 changed the way C S Sudheer looked at insurance. "The auto driver told me a sales person from my organisation had sold him an insurance policy with a promise that he would get Rs 1 lakh after three years if he paid Rs 25,000 every year," recollects Sudheer. At that time, Sudheer was the Karnataka head of Howden India, which was involved in risk management and retail insurance businesses. On checking the driver's document, Sudheer realised he was tricked into buying the policy, a regular premium unit-linked insurance plan. "That incident changed the way I looked at the insurance industry. For long, I thought insurance meant making money (incentives and commission); seldom did I think about the other person (the end user)," says Sudheer.
Baliga is helping the company build these apps and it is expected these will be rolled out by the end of next month. Also on the company's agenda is launching paid advisory services - a subscription-based model will provide in-depth and product-specific advice on the request of an end user. "With Sebi coming out with Investment Advisors Regulations, we are gearing up to launch the premium service by the end of December, even as we will continue to offer our generic free advisory services," Sudheer says. Challenges The chief executive officer of a mid-sized private life insurance company, however, says though IndianMoney.com has been able to draw individuals to take informed choices, it would have to widen its horizon. "Though financial advisory has been the company's strength, it could look at expansion such as securing a licence from the Insurance Regulatory and Development Authority (Irda) to become an insurance aggregator. Otherwise, it will be difficult to grow after reaching a certain level," he says. An insurance aggregator licensed by Irda can offer product comparisons in various insurance categories. The chief marketing officer of a large private general insurance company, says while the free-advice model has helped the company attract individuals, it will have to charge at least some premium for its advice. "Free advice can get you people. But if you want serious high-quality clients, you will have to place at least some premium on offering the services. Only then can the company continue to get traction, both from financial product providers and product buyers," he says. Investor speak "IndianMoney.com is empowering consumers with right and timely information to make informed decisions while buying financial products. Sudheer has stuck to his commitments. His company has grown about 10 times since we first met him last year, and exceeded expectations. It (free financial advisory) is an interesting area," says Mittal, lead investor and board member of the company. Koppolu says, "As he expands his business, Sudheer will have to consider maintaining quality more deeply. The best thing the company does is record every call. Right now, we are providing professional support on business analytics, as well as connecting him with senior industry professionals who are coming in as strategic consultants." He adds growth possibilities in this space are infinite, as there are millions of customers with annual incomes of Rs 3-10 lakh. With thousands of financial products available across the country, the financial advisory market is here to stay; IndianMoney.com hasn't even touched one per cent of the market potential, Koppolu says.
(With inputs from M Saraswathy) EXPERT TAKE With life insurance reach at a mere 3.5 per cent of gross domestic product, the Indian financial services industry is still at a nascent stage. The sector has huge growth potential and opportunities to create big businesses in next five years. However, currently, the entire distribution value chain is broken and suffers from high fulfilment costs, churn in the workforce, miss-selling, bad practices such as SMS spamming and spam calls and low consumer repeats. It creates consumer distrust and, therefore, results in a vicious cycle of low customer trust, high churn and high sales costs. In that respect, IndianMoney.com is addressing a key consumer pain in a very large market. First, the company is removing the information asymmetry by giving neutral opinion and information on specific financial products. The very fact that the company's revenue mode is independent of sales commission gives it a distinctive advantage over a broker selling financial products. IndianMoney.com also plays a key role in closing the loop by referring customer's validated information (with the customer's consent) to companies selling products. With time and consumer history, if the match-making between potential buyers and sellers becomes perfect, it would be the biggest competitive edge for the company. This will give it customer delight and consequently, validated information, and customer data, which would provide pricing leverage with sellers. Mukul Singhal is principal at private equity firm Saif Partners