00:00Good set of numbers. Is that sustainable?
00:04I think we will grow from here, and our growth rates should be very strong as we keep moving into
00:10the next four, five years.
00:14At what rate, what kind of numbers are you anticipating? What is sustainable going forward?
00:20See, if you look at the last five years, we guided about 30% growth, and what we've delivered is
00:26about 48% CAGR.
00:27Sure. So, we're still guiding a 30% growth, and again, with a five-year perspective.
00:34And the reason we feel this can hold for a long time is because India is still in its nascent
00:39stages of the development of social security,
00:43whether it's health insurance or whether it is life insurance, and I mean coverage for death, disease, pensions,
00:50as well as making sure that people have money at the time when their children go for education.
00:57So, these three, four pieces are still in early stages.
01:01You have to remember, India is coming out of a joint family system into a nuclear family system,
01:05and that is where, once you become a nuclear family, you need insurance unless there is very, very strong state
01:11-level social security,
01:12which will take time to evolve.
01:13So, this basically, these real wins help us.
01:19Post-earnings, Yashish, I'm just wondering whether you're now seen as a profitable tech company,
01:25or are you still a growth-first marketplace?
01:27How do you view the company?
01:29See, our focus is still on growth and customer excellence.
01:35I think profit is an outcome.
01:37Profit had to happen at some point.
01:39We've been operating for 17 years, and we broke even at about year 14,
01:45and since then, we've been increasing our profits.
01:47And, of course, like any internet company, as you keep growing,
01:52your profits scale very rapidly because your operating leverage is pretty high.
01:55So, you have seen profits more than double over the last one year,
01:59and before that, they had also, you know, about quadrupled.
02:03So, you will see profits growing, and that's what I tell investors.
02:06You should see profits growing at about 50% a year for the next five, six years.
02:12And the reason that's happening is just because as you grow on your overall base of revenues at about 30%,
02:19the profit growth is much steeper,
02:21simply because there is a compounding of renewals,
02:24and you've got operating leverage,
02:26which every internet business has to have operating leverage.
02:30As you said, you've seen rapid growth.
02:33I'm just wondering, what were some of your most toughest strategic decisions you've had to make?
02:40I think we have been very circumspect how we've approached health insurance and health care.
02:47It's a very large problem all over the world.
02:51Even rich countries with very high per capita GDPs struggle to make sure their population gets very good health care.
03:00And I'm certain we are not going to be any different.
03:04And in order to make sure we go in the right direction,
03:06we have to make sure we set up the right systems from the word go.
03:11And we have an opportunity to do so because our systems have not evolved yet.
03:15And I think Policy Bazaar was fairly advanced in that in the sense we have been working at it for
03:20the last 17 years
03:21with a very circumspect view that, you know, there has to be enough for the people to have good health
03:28care.
03:28And yes, of course, people have to sacrifice a little bit in terms of cost because it will not come
03:34for free.
03:35Health care can never, it's impossible for health care to be absolutely free.
03:38Whether you pay for it from taxes or whether you pay for it from your, you know, funds, you have
03:43to pay for it.
03:44So I think that is what has been one of our best bets.
03:49We've also realized that when you sell something like health care,
03:52you have to be very precise about the risk you are taking on.
03:55Because in early stages of development, you can get a lot of counter selection or, you know, adverse selection.
04:01And we've been good at making sure that does not happen to us ever.
04:06So overall, I think the writing, claims and health care all fall within the health care bucket.
04:14And that's what we've got right.
04:17Yes, when you take a look at insurance penetration in India, it's still relatively low.
04:22So what are the hurdles and how are you intending to overcome them?
04:28See, when we started in 2008, at a fundamental level, insurance were two pieces,
04:33either mandatory insurance, motor insurance or savings insurance,
04:37which is, you know, a combination of life insurance and savings.
04:41We essentially focused on pure protection, health insurance and term insurance,
04:46which might I say is underdeveloped all over the world, not just in India.
04:50In fact, I would say India is now fairly advanced.
04:53If you look in the detail on health and term,
04:56we are now starting to become fairly advanced in terms of adoption,
05:00even though the adoption is less than 10% of the middle class.
05:04The second part is the Indian middle class as it grows
05:07and becomes a little more, you know, let's call it middle class,
05:11because even our middle class is defined as somebody who's earning
05:14maybe, you know, $600 per month.
05:19So as that evolves, their spending power is a little higher
05:23and then their need and understanding for insurance starts to increase.
05:27So I guess all these come together to make it work.
05:33So how do you see the insurance as well as the lending ecosystem in India
05:39evolving over the next five years amid the current backdrop?
05:43So I think five years is too short a time frame.
05:46And I'll explain why I say that, because India is a big country.
05:51So if you look at the last 15 years, pure protection, health and term went from zero
05:56or less than 1% to about 20, 25% of the industry, of the retail industry.
06:03Now, if you look again at another 15 years,
06:06what you will see is health and term or pure protection will become more than 50%
06:11of the entire market.
06:12And I think those who don't focus on it would do so at their own peril,
06:17because they may believe that, look, and in insurance, the world moves slowly,
06:20which is why I said five years is too short a time frame.
06:22So people may feel that, you know, the way things happen
06:24and how they will happen in the future.
06:26But the future is going to be different and is proving to be different,
06:29as we're just showing.
06:30It's gone from 1% to 25%
06:32and it will go to above 50% of the entire industry.
06:35So the biggest piece in the market will be protection.
06:39And those that focus hard on it and focus early on it
06:42and are circumspect about it, I think will definitely gain from it.
06:46Lending is actually, when you think about it,
06:49and I'm glad you mentioned,
06:50unsecured lending is very, very similar in many ways
06:54to actually pure protection.
06:57Because in this, the risks start to change very rapidly
07:01with income bandwidth, specifically in a developing society.
07:04So I think both of these have an estimation of risk
07:08and then service delivery that needs to come together.
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