At 40%, we are growing faster than industry: Sarbvir Singh of Policybazaar

In an interview, Singh talks about why the demand has moderated in Q2 and how the growth in the health segment may not be sustainable as the fear of Covid-19 wanes

The demand for insurance soared in the first quarter of this year (Q1FY21) as people became increasingly aware of the importance of such products amid the Covid-19 pandemic, says Sarbvir Singh, chief executive officer of Policybazaar.com, an insurance aggregator. In an interview with Subrata Panda, Singh talks about why the demand has moderated in Q2 and how the growth in the health segment may not be sustainable as the fear of Covid-19 wanes. Edited excerpts:

How much growth have you seen in term products in the last two quarters?

We saw 30-35 per cent growth in the first half year-on-year (y-o-y). Q1 was better with 45-50 per cent growth, but growth in Q2 has been lower sequentially. Overall, we are in the 30-35 per cent range. 

Why did the demand taper down in Q2? 

There were two factors at play. Firstly, term insurance prices increased from April. In Q1, we also benefited from consumers buying ahead of the price increase.

Also, since initially there was a lot of uncertainty regarding Covid-19, consumers were a bit more scared about mortality. In Q2, however, we saw the fear shift. We saw growth in the health segment pick up in June and July, whereas term products did better in March, April, and May. One inference could be that people started thinking of Covid-19 as more of a disease issue than a mortality issue. Also, issuing insurance policies became a challenge after Covid-19 because many consumers were not comfortable with medical check-ups. Hence, even if you booked policies, you could not get it issued without the check-up.

Affordability is also becoming a concern. Term insurance is driven by one’s income and many consumers have either had a salary cut or lost their job. But we are hopeful that in the peak season (December–March, when there is a surge in people buying insurance to claim tax benefits, among other reasons), the demand for term products will pick up.

What is your take on the standard term product? 

The sum assured for that product is Rs 25 lakh — lower than we normally see in the market. It will definitely bring in a new category of customers and we will make every effort to promote it.

While term products have done well, unit-linked insurance plans (ULIPs) have suffered. How is the segment doing now?

Earlier this year, we started selling capital-guaranteed products, which is a combination of a guaranteed return product and a ULIP. It has done really well for us and consumers in the current environment have really appreciated this product.

There is obviously a fear of losing the principal. Yet, the consumers understand that in the long run if you don’t have equity in your portfolio, it’s difficult to beat inflation. So, the number of ULIPs has gone down but we have been able to sell a lot more capital-guaranteed products.

Is the growth in the health segment solely driven by Covid-specific products? 

The Covid-19 products came out in July. Before that, there were a handful of such covers but these were mostly low sum-assured products.

Till July this year, we saw an almost 100 per cent growth in demand for traditional health products. But after the standard Covid products were introduced, some went for the Corona Kavach, while others stuck to regular health indemnity products. It’s an affordability issue. Consumers understand that a traditional health product is superior to a product just covering Covid. But the fact that the Covid products were very attractively priced helped increase demand. 

Is the growth in the health segment sustainable? 

A 100-120 per cent y-o-y growth is not sustainable. But Covid-19 has taught people the importance of health and term insurance. Maybe the growth in the segment will not be as robust as we have seen in the recent past, due to Covid.

Are we seeing a revival in the motor segment? 

We are not a big player in the new car segment. But as people start venturing out, they will buy insurance. And being a digital channel, we have gained share in the Covid period. So, if the market is down 5-10 per cent, we on the contrary have seen an uptick because more people are buying digitally than they were last year. 

How much growth has the company seen in the last two quarters? 

Historically, we have grown between 50 and 60 per cent on a y-o-y basis. Our aspiration is to always grow in the 40-60 per cent range. As a digital player, we are growing faster than the market. We had a good first half, growing by 35-40 per cent.

Are you looking at dual listing? And how soon will Policybazaar get listed?

It will happen over the next 18-24 months. Right now, there is no concept of dual listing. At this stage, based on what the rules say, we can only list in India. If the regulation allows listing overseas, we will definitely consider that.