We will integrate AI chatbots with our products: Coverfox's Devendra Rane

Online insurance platform Coverfox completed its $22-million (Rs 144 crore) Series C funding round last month, which was led by International Finance Corporation, the private-sector investment arm of the World Bank. Between 2016 and 2018, the company secured Rs 49 crore ($7.6 million) in numerous tranches.

The firm is also backed by Infosys co-founder NR Narayana Murthy through his family office Catamaran Ventures, and Infosys co-founder Senapathy Gopalakrishnan and Sudha Gopalakrishnan, through Pratithi Investment Trust. Its other investors include New York-based venture fund Transamerica, Dutch insurance, pension and asset management firm Aegon NV, Accel Partners, SAIF Partners, as well as Venkatram Krishnan and Subba Rao of NuVentures.

Operated by Glitterbug Technologies Pvt. Ltd, Coverfox was founded in 2013 by IIT Bombay graduate Devendra Rane and MICA Ahmedabad alumnus Varun Dua. Dua quit Coverfox in 2016 to float Acko General Insurance Company, an online insurance policy provider. 

Coverfox has completed 4.5 years of active operations, according to Rane. TechCircle caught up with him to talk about how the firm will use the funds raised, how it is deploying technology, and its future plans. Edited excerpts:

You have recently raised funding. Could you give us details about how you are going to deploy it?

This has been coming to us over several tranches over the past few months as part of the same round. Till about eight months ago, we were largely focussing on the motor insurance space. Since then we have become active in term insurance, health and travel. The idea was to move fast on the technology front and I think our product stands out today. Sometimes, people in the industry push out products based on commissions or deals that are not transparent. So, we tried to put all these in front of customers and help them decide on the basis of their need. Then we help them [decide] whether [their] choice is good for [their] requirement.

You talked about technology. How is it changing or making a difference?

We don't want to run a large call centre. We want to be a tech company and not an online sales channel. While working on product development, we have [reached] a stage where almost all of our bike insurance is being paid unassisted today. Around 60% of car insurance premiums are also paid unassisted. The vision is to make the products seamless so that customers can do whatever they want without assistance in under 10 minutes. We are [transferring] all our learnings from motor insurance to all other products.

How long will it take for you to turn profitable? How does the path look like?

This funding can last us a good three years. We will be break-even for most of our segments by December or the latest by March April next year. It is not about profitability in India. Look at e-commerce. Billions were spent to create a need, a market and they still don't make profits. Like e-commerce, the insurance market is also huge and badly under-penetrated. Government is also trying to promote insurance and all this will have an impact on awareness and the overall growth of the industry. India is at the cusp of a big revolution in the sector. The online companies sell about 5-105 of the overall industry sales.

You have larger competitors backed by prominent funds. How does that impact your bottom line? After all, everyone is chasing the top 10% and you have to even compete with offline players.

Not so much really. I will tell you why. You have more than 50 million people buying several things online but this same set of people are not yet buying insurance. If all the players together can sell 30-40 million policies online across various segments, it will be humongous. We might be overlapping with customers, but all the players are doing well [and] are trying to be profitable soon. Hence, the undercutting of margins is not there. The offline insurance players have always been bigger and they are our partners.

How many policies do you sell in a month?

We sell about 65,000 polices a month and that is growing month-on-month. We will double that number by the end of this year or even touch 1.5 lakh. We grew three times in the last 12 months and this year with the funding, we can easily achieve that. Now, our revenue is closer to $1 million or at this rate, we will close well beyond Rs 70 crore by the end of this year. 

How do you see the next phase of growth happening?

So, we have created a platform for insurance brokers some six months ago. These are existing licenced brokers. Those agents use our app to sell products and it is growing fast. With that, both of us can go deeper into the market. We will also introduce ULIP-like products, which have to be self-serving. We will focus a lot on health insurance now. Chatbots will understand customer needs and suggest the best products. We are working towards a deep integration of artificial intelligence chatbots with our products. We work with Google and Amazon to improve our capabilities in AI and machine learning.

Do you work together with Acko?

We are two completely different companies now. Both of us have some similar investors and cross-holdings. We don't talk much to each other. We can look at partnerships in the future. 

How do you see the margins going forward?

We are trying to increase margins and that is how we penetrate better. The Insurance Regulatory and Development Authority is also working towards it. Digitisation is helping agents and the ecosystem.