India’s largest digital payments company, Paytm, through its mobile wallets is looking at ways to revolutionise India’s insurance business. It has launched a program to offer health insurance to auto and cab drivers – 300,000 of them – who use Paytm to accept fares.
Health insurance coverage in India is abysmally low at 3.3%. In contrast, South Korea is at 11.3% and UK at 10.6%, according to Statista.
To start with, Paytm will provide ₹50,000 of health cover to the drivers, without the need to furnish documents or go for a health check-up. In the months to come the policies will be extended to the drivers’ family members. They will also be able to increase the value of policy.
“We do not want to be just another distribution platform, but offer a lot more than that,” said Krishna Hedge, head of financial services at Paytm.
Paytm’s philosophy is to drive large number of small ticket transactions, such as paying toll taxes, paying for packets of milk, auto and cab fares, and mobile recharges. This large volume will be monetised over time.
Every driver who opts for the insurance, will be given an insurance card. The first two premiums, of ₹100 per month, will be free.
But it won’t be limited to drivers. The evolution will be phased. Soon, a larger number of merchants in the unorganised retail space such as small shopkeepers and or the owner of a Mother Dairy milk-booth will be able to avail the insurance. Paytm has a base of more than 600,000 merchants.
The insurance will be deducted from the wallet, which the merchants use to accept money, every month.
This will reduce the money that an insurance company – in this case, Paytm’s partners – spends to acquire and retain a customer, which includes marketing cost, agents’ commission and collection. “That benefit can be passed on policy holder… The potential is huge as healthcare, unlike in developed countries, is hugely underpenetrated,” said Sanchit Vir Gogia, chief analyst and CEO of Greyhound Research.
Paytm will also offer multiple payment options – daily, weekly or monthly premium pay-out. It will also look at life insurance in the next phases. “We will have a huge range of products,” said Hedge.