Emerging Entrepreneurs

Making insurance bite-size, simple and affordable

N Ramakrishnan | Updated on May 01, 2019

Rohan Kumar, CEO and Co-founder, Toffee Insurance   -  Bijoy Ghosh

Digital start-up Toffee Insurance offers bundled policies that cover bicycles to backpack

Mention the word toffee and it will bring back childhood memories of having had plenty of them. Bite-sized, toffees are a source of joy for children. Even those who do not know English, can relate to the word. But what does that have to do with selling insurance? Especially naming a company that sells insurance products digitally as Toffee Insurance? Ask Rohan Kumar if it does not convey something flippant when selling insurance is a serious business? He says toffee is something everybody will be able to relate to, even in small villages and even if they cannot speak English.

Rohan says he and his Co-founder, Nishant Jain, settled on the name Toffee for their venture because they were trying to offer bite-size insurance policies, tailored for those in the 25-35 years age group and removing the complexities associated with getting an insurance policy.

Pact with leading insurers

“We are not a full stack insurance company, but we position ourselves as a pseudo insurance company, which means that for a customer, I am an insurance company. The products that I create are deconstructed features from multiple insurance partners,” says Rohan. Toffee has tied up with eight insurance companies, including Apollo Munich, HDFC Ergo, Future Generali, ICICI Prudential, Tata AIG and Religare.

Rohan hit upon the idea of Toffee while he was working with Nishant, who was running a consulting business that advised clients on product and design strategy. “Working with Apollo Munich and a few other insurance players in the US is where we came up with the idea of doing Toffee, which was how do you take insurance from this lethargic, old, elephant and make it young. Make it simplistic, relevant and affordable for the masses,” says Rohan.

“We said the first thing we have to do is to decouple these comprehensive products and make them simple enough for people to understand,” says Rohan.

The idea was to pull out independent features from various insurance products and bundle them and see if it made sense for customers. For instance, Toffee has a bicycle insurance product, which covers three aspects – theft of the bicycle, damage to it and personal accident cover for the cyclist. “We have theft and damage from one underwriting partner and personal accident cover by another underwriting partner. When you get the product, it is called bicycle insurance, but at the back of the insurance, you have two documents,” explains Rohan.

Similar to the bicycle insurance product, Toffee has other products including for spectacles, dengue and other vector borne diseases, backpack insurance, and domestic and overseas travel.


Adopting novel method

They also positioned the product to make it attractive for customers to buy. They had to price it right. The most important layer to their business was in distribution. Rather than directly go and sell these products, Toffee adopted a novel method. It tied up with bicycle retailers, pharmacists, opticians and the like. The insurance premium would also not be more than 5-6 per cent of the cost of the product. For instance, if a bicycle cost ₹10,000, the premium on it would be ₹500-600. For the channel partners, selling the insurance was easy as it did not entail explaining complicated policy issues and they also got additional income. Toffee gets its income through a commission for being an agent to sell the policies.

The whole thing is digitally done and claims are processed extremely fast. In the last one year of being in business, says Rohan, Toffee has approved 98 per cent of the claims. The company is present in 120 cities, has about 1,500 merchants that sells its products in the offline space and digital partners to sell them online. It has done about 75,000 policies in the first year, which number should go up to at least 3.5 lakh policies in 2020. The average ticket size continues to be around ₹500 a policy, with Toffee ensuring that the premium stays in the ₹700-800 range.

With more policies being sold and more data becoming available, Toffee will be in a position to price the policies depending on the risk profile of the customers. To prevent fraud in insurance claims, the company will ask all those making a claim to record a short video narrating the incident, which it will use to detect frauds. “I have tied up with an Israeli facial recognition software company. When you make that claim, I will take snapshots out of that video, send it through that software and the software will come back to me with several parameters saying whether one is a criminal or not,” says Rohan.

As the company expands its product range and covers more cities, it will look to raise more funds. The money will be needed to build the infrastructure to support more merchant partners.

Published on April 29, 2019

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