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Embedded insurance

Why evaluate insurance?

Insurance as an offering is under penetrated in India and hence, e-comm firms across industries are extensively venturing into embedded insurance offerings. Also, with the rise of insuretech firms and aggregators, there are various innovative insurance offerings that can be curated to serve different needs of users.

Approach

We have been in close touch with leading Insurance and Insuretech players who specialize in curating sachet/pocket embedded insurance products such as CoverGenius, Turtlemint, ICICI, HDFC Ergo and Bajaj Finserv

Additionally, we conducted user research and spoke to 15 users and conducted a comprehensive survey to obtain a user’s understanding of insurance

Based on our discussions, we have evaluated Insurance from the following lens:

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Key learnings

Supplier side insurance

Returns (especially wrong returns), RTO, Orders and Claims are the major pain points for sellers and since their wallet share is limited, they won’t be willing to pay for any assurance product other than the ones which solve for these problems (we already have programs for Returns, RTO and Claims and already experimented with Orders Assurance)

Additionally, the typical adoption rate for a non-contextual insurance offering such as personal accident cover or group health insurance does not exceed 5%. With such an adoption rate, the opportunity for supplier side insurance is limited

User side insurance

Table 77

Table 77

S no.

Particulars

Outside in benchmarks

PoV for Meesho

Embedded contextual offerings with an opt-out model (insurance is checked in by default unless user explicitly opts out) have the highest adoption

Ola ride Insurance has an adoption rate of 30-40% (mainly owing to opt out model)

Based on user LoD, there are no major contextual insurances that users will be willing to pay for. Quality is the only pain point- can explore a product to assure quality

Opt-out model will likely hamper user experience

Embedded semi-contextual offerings work well for high value products

Extended warranty on purchase of mobile phones. Attachment rate of ~3% on AZ

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NA since we don’t have high value products

Difficult to get adoption for low value products

Embedded non-contextual offering has worked well for FK

Digital Suraksha (cyber cover) is being offered by FK

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Can offer cyber insurance

Non-embedded non contextual offerings don't work well

FK insurance category has seen very low adoption rates

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Opening a separate tab anyway requires a Consumer Agency licence

Adoption rates will likely be low leading to relatively lower opportunity

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User research

A. User calls (n=13)

Most of the users were aware of insurance however only 2 users had purchased an insurance ( LIC)

We specifically tested user interest to buy Digital Suraksha/Cyber Insurance. ~61% users (8/13) showcased interested to buy cyber insurance owing to fear of cyber fraud

Final shortlisted opportunity

A. Cyber Insurance (to be prioritized )

Considering a cyber insurance offering is already available in the market and is being offered by a lot of players (validation through outside in), we want to experiment by launching a sachet “Digital Suraksha” offering for users. PFB the details:

Sum insured: INR 5,000

Coverage:

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Premium: INR 5-10

Estimated opportunity: INR 39 lacs per day

Based on results of Digital Suraksha, we can explore other insurance offerings such as Quality Assurance (contextual), Mobile Protect/Screen Protect, etc.

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B. Quality Assurance (to be evaluated in detail)

A. Coverage

Fade protection in case color of the product fades post wash

Shrink protection in case the apparel shrinks post wash

B. Sum insured: ~70% of product value

C. Period in which a user can file a claim: 30 days starting at the end of the 7 day return window

D. Cost of Quality Assurance (can be reworked)

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E. Meesho commission: 20%

F. How it works?

Documentation: User to take clear photos and share a short video showing the extent of fading or shrinking

Claim Initiation: User to log in to their Meesho account and initiate a claim providing necessary details, including the documentation

Evaluation: Meesho experts/ops team (to be set up in collaboration with existing claims team within F&E) will assess the documentation provided and verify the genuineness of the claim

Reimbursement: Upon claim approval, user receives a reimbursement (in source account or in the form of Meesho coins) equal to ~70% of the product value (excluding the cost of Quality Assurance)

G. Exclusions

Intentional Damage: Quality Assurance does not cover damages resulting from deliberate actions such as intentional exposure to harsh chemicals, excessive heat, or improper care with the intention of damaging the item.

Normal Wear and Tear: Apparel naturally undergoes some degree of wear and tear over time due to regular use. Gradual fading or minor shrinkage that is a result of normal use and not a sudden or excessive occurrence is not covered

Accidental Spills or Stains: Any damage caused by accidental spills, stains, or exposure to substances like ink, bleach, or strong dyes is excluded from coverage.

Third-Party Alterations: Any modifications or alterations made to the apparel by third parties, including tailors or alterations services, which result in shrinking issues are not eligible for coverage

Appendix (Outside in)

Table 78

Table 78

Sachet products offering

Company

Construct

Adoption

Screenshot

Cyber protection insurance

Flipkart

Digital Lender Partner

Embedded cyber protection insurance for those who order electronic products- tested both opt-in and opt- out

Provided cyber insurance for online frauds via opt-in method

FK:

Opt-in construct: <1%

Opt-out construct: ~5%

Lending company: 30% for (Opt-in construct)

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Vector borne disease insurance

Pharmeasy, Healthians etc.

Health insurance for water borne disease

20-25%

Shoe Insurance

Offline stores- Khadim

Cover of 500-1000 for accidental damage such as dog bite for 3/6 months with INR 100 as premium

5-10%

Rider Insurance and Health Insurance

Ola

A. Embedded

Contextual: Ride Insurance- INR 2 is added with every trip and can be claimed if something happens during ride

Non Contextual: Doctor service+ Health insurance- cover for 1 month

B. Non Embedded: Ola Insure as a platform that has gambit of offerings such as health, life, motor

For ride insurance: 30-40% (consent taken only in first ride)

Non contextual - 10-20% adoption

Non embedded- Less than 5% adoption

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Jewellery Insurance

Candere ( Kalyan Jewellers)

Contextual - Jewellery insurance of 1% of total value of Jewellery item

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There are no rows in this table

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