Flipkart and Bajaj Allianz team up to provide insurance for smartphones

Walmart-backed e-commerce marketplace Flipkart will mark its entry into insurance segment this Diwali, with the offering of a complete protection plan to customers who buy smartphones on is platform.

Flipkart has secured a corporate agency licence from the Insurance Regulatory and Development Authority (IRDAI) and has partnered with Bajaj Allianz General Insurance for the scheme. Customers who buy the plan will be offered either a cash payout, or a free pickup, service and drop facility if their devices get damaged or stolen.

“It (insurance) is the logical next step in providing consumers with excellent after-sales care for their phones. The plan, from purchase to claim, will be completely integrated into our online platform, which customers are already familiar with and trust,” said Ravi Garikipati, senior vice-president and head of Fintech at Flipkart.

The foray into offering micro-insurance, customised specifically for the products it sells, is the second major step to establish itself as strong player in the financial services space. Last month, the company announced to offer credit of up to Rs 60,000 to its customers to purchase any products on its platform, without a requirement of a credit/debit card.

Prices for Flipkart's mobile protection insurance scheme will start at as low as Rs99 for one year, which will be operational the day the device is delivered to a customer. In the case of a claim, the customer will be able to complete the process entirely through Flipkart, either on its app, email or phone call, taking away the hassle of dealing directly with the insurer.

Presently, smartphone as a category drives the biggest chunk of sales on Flipkart's platform. Besides, given that smartphones are more prone to physical damage or being stolen, the company is learn to have started its insurance foray with smartphone. Over time, it plans to offer insurance for other product categories, especially for high-value products.

Garikipati said the foray into the e-commerce specific micro-insurance segment would set the stage for Flipkart to sell life and general insurance to its customers. However, the company will not turn into a marketplace for selling insurance such as PolicyBazaar, BankBazaar or CoverFox, but would rather curate policies from a few selected partners.

While its current credit product is being underwritten by partners, Flipkart is in the process of applying for a non-banking financial company (NBFC) licence, which will enable to lend to customers from its own balance sheet. Presently, around 60 per cent of the 100-million customers it has on its platform don't have access to credit. 

Rival Amazon, too, is making headway in the financial services space, largely looking at lending to customers and sellers, who do not have access to formal credit.

Both e-commerce giants are looking at ways to enable customers to make larger purchases on their respective platforms, without having to make large upfront payments.

Experts believe one of the biggest attraction for e-commerce companies to get into financial services space is to get access to data on how consumers shop on their platform and analyse their spending pattern. This can also give them insight to the credit worthiness of the customers.  

While both the firms claim to be seeing around 100 million people shopping on their platforms each, a small percentage of that only do repeat purchases.