Health premium surged 65%→60%→79%→68% YoY through four quarters.

Typically Indian companies go out of India in search of growth when growth in the core market starts slowing down. But for you, growth in India is accelerating. Is it something really great in an international market that makes you look there? Or just replicating in other markets what you do in India? What is that area of expertise you've been looking to bring into the international market?

I think it would be fair to say that Policybazaar is perhaps the most evolved insurance distribution model across the world. We add a huge amount of value to consumers and a huge amount of value to our insurance partners. We bring them profitable business, lots of business, and to consumers, we make sure that the price stays controlled, but also that their claims are settled. The US is, I think, 50 times bigger than the Indian market; Europe is 15 times bigger than the Indian market. We've been observing those markets for the last 20 years very, very closely. They are very profit-rich markets, but they have almost zero innovation. And, of course, they are crying for innovation. So, I do think we will add a lot of value. Diversification has its advantages. You want to be in multiple countries, and also, I think it's time for India to have its own MNCs. Why should only Google and Facebook operate in India? Why would companies with their head offices here not operate abroad and serve international customers or international partners. Let's hope our board agrees, let's also hope our shareholders agree, let's hope we get all the regulatory approvals, and then, let's see where we head.

On growth on the Core insurance side, new business premium - where is it coming from? Industry data talks about much lower growth, some of the partners who work with you more closely have grown faster, but still probably half of what you have grown at. How are you driving this growth?

The first point, which has been written in the press release, is that we've grown our protection business 68%. If you see, protection is over half our business and if you're over half of your business is going at 68%, then mathematically, you can get to the numbers. Protection or risk products have a unique property - they cannot be sold on commission alone. Risk products have to be sold on the basis of disclosure, and the fact that you are able to produce or help a person at the time of claim. It takes a while to build capability. Policybazaar has spent 18 years of solid advertising. We deploy state-of-the-art models, whether it's GenAI now, ML earlier, to capture disclosure. This allows the insurance company to price the risk appropriately. Once the risk is priced appropriately, you are able to pay the claim and move forward. It's a virtuous circle. This circle takes a long time to set up. We are seeing today the benefit of decades plus of effort. When the industry grows stronger, we also grow ahead of that, and when growth is not so great in the market, we still are able to find the growth. At this point, touch wood, I would say we have it going.

On commissions that we are effectively getting - YoY, health and term, which are probably the highest commission product in year one, have grown fastest. So ideally, commissions should have gone up. In this quarter, new business premium has grown at almost a similar rate to renewal, don't see any dilution from that. Still, commissions were roughly flat. Are we reading too much into it?

Sachin, you might be reading too much into it. There are various pieces that move. In health, our largest selling product is also our lowest commission product. Why is that? It is a product in which we give disproportionate benefit to the consumer. We do that because the insurance companies agreed to pass that benefit on to the consumer. We are not commission-centric, we are consumer-centric, and we make ourselves so efficient in risk capture and disclosure capture, so that at the point of claim, we are standing there to do that. What has happened over the last 4 years, the discipline in the claim support has become very high and the ethos and the culture is very, very strong. So that is leading to positive outcomes.

On capital allocation piece, if you can put some colour around that as strategy.

Yashish: All of our businesses, from here onwards, whichever new initiatives we have, are generating money. We may think around investing, once we get the Pension model right, we may think about investing a bit there. But that'll be minuscule compared to the overall organization. If we get board approval and shareholder approval, we would, over time, like to diversify both in India and internationally. Whatever we do, would be significantly EPS accretive, or PE accretive. We are not going to just throw money at something. It would be something bought as a value investment, which we can transform and make far stronger, and make those entities more competitive in their home markets. Alok: This is an execution-led business. You have to keep on doing it day in and day out. There's no secret sauce. You just put customer at the center of everything. We are not a distributor only; we are a partner. There's no single one thing that you do and suddenly you can become another Policybazaar. There are hundreds of small things. We have gone deeper into the value chain - insurance brokerage, garage networks, now PB Health, PB pay. We have also gone wider - bonds, pensions. Both depth and width in India. We tried one experiment with Dubai and Middle East, which seemed to work quite okay over the last 5-6 years; in terms of growth, in terms of transforming that market, in terms of profits. And now, those learnings potentially can be taken to other markets, whether it's Southeast Asia, whether it's in Middle East, whether it's in Europe.

When you studied some of these international markets, in case if you were to go for an international expansion, is there a possibility that some of the cost base can be shifted to India or domiciled in India? Second, on the POSP side - there's a lot of consolidation in the industry over the past few quarters or years, but if you look at B2B2C business in other sectors like mutual funds, margin profile on a steady state tends to be far higher. Do you envisage the path to profitability in the POSP business to be tad better than what you would have anticipated 2 years back? Third, on expanding your hybrid strategy into newer locations - some colour on the progress. Finally, on Paisabazaar - Alok mentioned bonds, previously you also stated mutual funds or broking. What could be the overall product suit of Paisabazaar?

Yashish on international: Many markets and India both have a lot of talent for somewhat different sides of things. Clearly, technology, finance processes, India does tend to have a very significant advantage. Specifically when you think about products like Health, Life, Policybazaar brings a lot to bear. There is clearly going to be a lot of integration opportunities and cost synergies, for sure. Yashish on POSP: Insurance is a high-level push sale. If I look at insurance agent, he would spend about 95% of his effort trying to make a sale. The biggest problem in the insurance industry is demand generation. In insurance, the person who brings in the business takes a disproportionate share of the value. We are doing maybe Rs.7,000-Rs.8,000 Cr ARR. The number two may be doing Rs.4,000-Rs.5,000 Cr. Does that mean at Rs.20,000 Cr, we will make Rs.100 Cr of profit? The margins are very, very thin. I genuinely don't think they are supremely profitable. They do get you scale. Sarbvir: In POSP, we sell motor insurance. Mutual fund is a pull product, where customers want to buy. Motor insurance does not have that same AUM concept. Number of insurance agents in India is fixed. Consolidation in this business is actually not as valuable as it may seem at first blush. This year, we do Rs.7,000 odd Cr in premium. Our goal next year is to increase the scale of this business, not necessarily to extract profit right away. We want to drive scale and efficiencies. Yashish added: It also does not make big losses because fixed costs are very small - mostly variable. Anybody who's had money has succeeded at this business, till the money runs out. Sarbvir on hybrid: In health insurance, we continue to expand. We are up to almost 300 cities now, where we have a presence. In savings, we have started a new model about a couple of quarters ago, where we are going to mid-sized cities, setting up smaller offices. We are now in about 20-odd cities, and very delighted with the results. If this model starts to work, then it will open up a whole new set of cities and opportunities for our savings business. Santosh: The idea for Paisabazaar is to become a full financial platform that is able to manage both assets and liabilities for customers. Savings and investments are a natural extension of what we are doing. Bonds was a very exciting time to enter. Both fixed deposits and bonds are something we've launched. Mutual funds will also be added to the portfolio, maybe a quarter later. Over time, improve LTV for our customer and maximize engagement, so we are available across the lifecycle.

I was talking more about from a take-rate perspective and economics perspective. There were negotiations with partners, so all of that is behind us, or is it still ongoing?

Sarbvir: We've always maintained that our negotiations are always very cordial, and we work towards maximizing customer value. GST is yet another example where we've been able to work with our partners and come to what I would call a win-win kind of outcome. That part is behind us, and we are proceeding with confidence. Yashish: In Sarbvir's answer, you should have picked up how the mind thinks. You asked a question about impact of GST, and Sarbvir spoke about volume while you were actually talking about Take rates. It's just that in the mind, we are all tuned to think volume. The quicker that sinks into investors, the better, because that's just our reality. The take-rate is the outcome.

How should we think about customer acquisition costs going forward? We are showing very strong growth, but from a cost-efficiency perspective, specifically in terms of new customer acquisition and cost of doing the entire transaction. What are the steps we are taking to improve the cost efficiencies?

Our teams work very hard, day in and day out. Over the last many years - on television, we were TV, then we went to regional television, we did OTT; TV is a fragmented medium and we are on connected TVs now. On the paid side, we used to be a lot of non-brand search, which is Google. We've now started doing a lot more from Facebook or Meta. We've started doing a lot of influencer marketing. We've learned a lot on getting our app downloaded by customers. Every year, our teams come up with newer strategies to acquire customers. I don't see any major change in customer acquisition costs. Actually, the spend over revenue has gone down in the last 3 years. That's not like there was a strategic intent to bring it down or anything, it's an outcome. The biggest problem in insurance sales is demand generation. Marketing is the key thing.

On PB Health - any update on PB Health? When is our first hospital going live?

Alok: That's more of execution business. There are a few moving parts there. We are building physical capacity, so we've taken up a hospital in Noida, we are going live with one small hospital in Gurgaon in another 3 months, maybe. The way tech is shaping up, with huge focus on making tech more easy for both consumers and medical professionals to use. Use AI from day one. The whole aim about PB Health was to keep people out of hospital. So, hospital, yes, we'll do what we have to do, but we are focusing a lot on building services which can keep people out of hospital - OPD services, digital GP, preventive services, chronic disease management. Yashish: A lot of people think of PB Health as some kind of hospital chain - that leads to confusion. There are 14,000-odd hospitals in the country. If you had to work with maybe 500 of them, break them down into secondary, tertiary, and route your customers to a smaller set, you would be able to control quality and experience better. That's a network, which is PB Health. It is not very different from what we do in PB Wheels, which is the garage network. Because hospitals are a little more complicated than garages, some of these capacities, maybe 15-20% of it is self-owned. The biggest benefit actually comes from when the customer comes in, can you point him down to the care pathway, so that a person with malaria does not end up at a tertiary care hospital. PB Health is about integrated healthcare. From a hospital's perspective, we now have action on four different properties - one fully acquired and ready hospital, one at some level of development, one at a point where in 3-4 months it should go live.

On the acquisition and the QIP - what would be the boxes that an acquisition would need to tick for it to be a lucrative opportunity for you? Secondly, on MGAs now being allowed in the new Insurance Act, how are you looking at that as an opportunity, and would you use that to underwrite policies under PB's own name?

Yashish: As we look at the international expansion opportunities, our criteria are large market, stable player. So, there is not much damage we can do to it through the acquisition. The second part is, can we transform it to the better? Our skills here have something that we can add, and our familiarity with the market is high. Suppose I went into Indonesia, and I don't know how to operate in Indonesia - it'll be tough, low familiarity. On the other hand, if you think of UK, it is like the back of my hand. On MGA: I believe, MGA is the single most transformational move that can happen in the Insurance industry. When the distributor, who's in touch with the consumer, becomes responsible for both the underwriting and the claim settlement, and at a wholesale level, is working with the insurance company. This is exactly what NBFCs were to banking. Imagine where our banking services would be if there were no NBFCs in the country. So, NBFC is exactly what the MGA is. Sarbvir: We have been talking about this for a long time. It neatly ties into our model of focusing on the customer from beginning till end. It allows us the freedom to basically make the underwriting as well as the claims decisions at the Policybazaar level. As far as the brand is concerned, you are selling a product which belongs to an insurance company, and we are very comfortable with that. The main attraction is the flexibility and freedom. The concept of MGAs will really drive insurance distribution in India, and it will help. We want penetration of insurance to go up. Insurance is a distribution business. 95-98% of insurance is sold by intermediaries. The strength of insurance is distributors, and giving them the freedom and flexibility will take this whole thing to a next level.

On the acquisition bit, if you stay within insurance, would you also look at insurance manufacturing, or it would be restricted to insurance distribution?

I don't think we are going into manufacturing quite yet.

On health insurance growth - multiple things would have played out. One would be your existing customers going for higher sum assured. Second would be the number of people taking long-term policies. Then new lives coming into the segment. How would you say each of these parameters contributed?

Yashish: Mathematically, nobody can deliver the kind of growth we are delivering over the last 12 quarters, by any of those means. It's just impossible, mathematically impossible. So, there is something else - it is the hardest thing to achieve in the insurance industry. People believe when they buy from Policybazaar, they will get a better claims experience. There's a lot of other things we are doing - we are segmenting, working hard, marketing is better, our people are working better, training is more, creating new products. But the core answer is that. We have the right to settle claims because our disclosures are better. Sarbvir: Each of the points that you mentioned - these are new customers, so the 79% is the new fresh growth. If they take more sum-insured, that only increases the ticket size. That is a small factor. Multi-year policy for us has not changed, so the proportion of multi-year policy last year and this year is roughly the same. On portability - portability this year is lower than portability last year. If you look at the contribution of Fresh Lives to our business is at its highest. Portability has gone down a little bit in the industry also. But for us, it was always lower, and it has become lower this year.

Generally when we talk about health insurance, you've been talking about new health insurance being a drag on contribution margins. But if you look at the core online insurance business, margins have remained flattish. Is that just scale, or is it something else?

Prayesh, in health, you mostly make your profits from renewals. In life, you mostly make your profits from fresh business. Because both term and health are growing, it's become like a double-engine contributor. For a while, term growth was lower, health growth was higher, but now both are contributing. For 12 quarters, you have been growing at a rate of, let's say, 60% on health, then your renewals also start to grow at the same rate, which is what is starting to happen now. The renewals growth is really speeding up.

Any color in terms of what has grown, whether it's ticket sizes, it's number of customers?

It's largely number of customers. I think health, a little bit of ticket size has also grown, year on year, but that's a smaller contribution to the overall story.