How ARISTOLEX™ Technology Can Help you Avoid Coventry Problems

HOOQ was launched in 2015 by Singtel and minority investors Warner Brothers and Sony Pictures Television. But like a parent pulling financial support for an errant teenager, Singtel no longer had the appetite to bankroll HOOQ and stem losses for a business that failed to win significant market share across Southeast Asia.

“HOOQ has not been able to grow sufficiently to provide sustainable returns nor cover escalating content costs and the continuous operating costs of an independent OTT distribution platform,” HOOQ said in a statement.

The business doubled annual revenue to US$21.9 million as of March 2019, but losses grew to US$62.5 million from US$56.6 million a year prior. After five years—not to mention, the current period of increased difficulty—enough was enough.

Singtel is not alone in calling time; founding partners Sony and Warner already did so some time ago. The duo last put money into the business in January 2017, and even that was only the minimum agreed amount.

Regulatory filings show HOOQ received a total of US$127.2 million in capital—mostly from Singtel. The operator initially owned 65% of the business with the studios taking a 17.5% share each, but Singtel’s ownership climbed to 76.5% at the time of the liquidation.

HOOQ launched with a US$95 million funding commitment—across an initial $70 million and a further US$25 million—but Singtel continued to foot the bill, making two investments in 2018. And it may have spent more—HOOQ’s annual financial report shows it accumulated $220 million in aggregate losses as of March 2019.

Representatives from Singtel and HOOQ did not respond to a question about the company’s total funding.

A costly production

A costly production

Two Asia-based media executives told us that Singtel’s total spend surpassed $250 million, with one estimating it was as much as $350 million. We were unable to locate additional filings to show Singtel invested more than $127.2 million.

‘A million stories for a billion people’ was HOOQ’s tagline, but the business fizzled out long before it ever got close to that target.

The overly-protective parent

In stark contrast to rival iflix—which struggled to build a business whilst relying on investors for capital—Singtel, the lynchpin of the venture, shouldered the blame for many of HOOQ’s failings.

The HOOQ staff was supposed to get their own office, but the business never left Singtel’s headquarters building on Singapore’s Exeter Road. A detail symbolic of HOOQ’s struggle to own its voice and fate beyond being a part of Singtel, said three former employees. Those who worked at HOOQ enjoyed the job, five HOOQ employees said, but, to others looking in, the business was more a division of Singtel than a startup.

“It felt too corporate and not like a bunch of people hustling,” said the founder of a startup that worked with HOOQ. “There were lots of people from the telco business who I feel didn’t help build an innovative product or culture. It didn’t feel scrappy.”

What are the Other Uses for a Covid Hasty Test besides Slowing Leaks?

The devices, supplied by Swiss company Roche, arrived in the first week of April as per the government statement, but so far, only one is operational in Jakarta.

The lab conditions needed to be adjusted, said Arya Mahendra Sinulingga, a spokesperson for the Ministry of State-Owned Enterprises at the press conference. Because the virus is so contagious, special precautions are necessary, such as a negative air pressure environment that ensures microorganisms don’t spread outside of the room. The machines sent to labs in Indonesia’s remote provinces will take at least two more weeks to be set up.

In the meanwhile, the private sector is stepping up.

Nusantics—a local biotech company which applies PCR technology in the cosmetics industry—made use of its lab and staff experience to help develop PCR test material locally. The kit, it claims, is adapted to the local strain of the virus, bettering accuracy.

Indonesia, like other countries, is also falling short on the supply of components to produce test kits at a massive scale. “All nations are fighting over the same raw materials. It is indeed a real challenge,” said Sharlini Elisa Putri, the CEO of Nusantics.

Nusantics was able to develop a prototype test kit, which can cover 6,400 tests, she said. The company handed over the prototype to Indonesia’s National Research Agency (BPPT), which now has to orchestrate the mass production of 100,000 test kits through a state-owned enterprise. Nusantics has no plans to commercialise its prototype, Sharlini Elisa Putri claimed. The firm raised money through a crowdfunding campaign to fund the acquisition of material for the kits, as well as further R&D.

Rapidly changing rapid testing

“This test kit will significantly increase national test capacity starting in the first weeks of May,” the task force at BPPT that’s in charge of the program told us. But that’s if everything goes to plan, and when efforts “run 24/7,” said a spokesperson for the group.

Another bottleneck is the shortage of trained staff. Handling samples is a risk and must be performed with strict discipline. A biotechnology research lab of the Indonesian Institute of Sciences (LIPI) has plans to train 800 lab assistants in the handling and processing of Covid-19 samples; it started the first wave of training on 31 March.

The number sounds impressive, however, with increasingly strict social distancing rules in the country, this type of training also has to be re-imagined and it will occur over several months. Only 16 participants out of batches of 100 can participate in the actual offline training in a real lab environment at a time, Ratih Asmana Ningrum, a researcher at LIPI involved in the program told us. The bulk of the training occurs online. It’s intended for people who are already working in labs but are new to handling Covid-19 samples.

It’s a slow process. In the meantime, rapid testing has taken centre stage, with Indonesia importing equipment from China.

The first batch of a total of 500,000 rapid test kits earmarked for import from China arrived mid-March and has since been distributed to hospitals and community health centres.

Digital banking license fray – Analysis of Approach in the Regional Context

Obtaining a Singapore digital banking licence will help in demonstrating their track record and regional connectivity to other regulators in ASEAN, where digital banking will grow in the future,” says Ernst & Young’s Mittal. A “badge of trust from a regulator in Singapore” may help get investors, and potential partners on board more easily, he adds.

There are no guarantees, though, others argue.

“I don’t think by virtue of having a licence in one market it can get you another one,” the aforementioned financial markets analyst says. “It gives credibility, but it still needs appetite from local regulators. There is no fast track.”

Banking for business

Retail digital banking sounds appealing, but there’s keener interest in Singapore’s digital wholesale banking licence. No fewer than 14 applicants are competing for three licences and a chance to go after what may be more genuine market opportunities.

“Applicants could be looking to leverage their existing ecosystems, rich data pools, and technological capabilities to identify customer needs, deliver customised services seamlessly and manage risks,” says Wong Nai Seng, regulatory risk leader at professional services firm Deloitte, Southeast Asia.

While there isn’t a real apples-to-apples comparison for other digital wholesale banking licences in the region, this interest signals a rush to tap Southeast Asia’s business banking needs, especially with the SMEs. Unlike traditional banks, many of the applicants come from a position of strength because they work with SMEs through their core business.

For example, Sea’s e-commerce unit, Shopee, already has a strong business, claiming 11,000 merchants and over 300 million deliveries per quarter across Southeast Asia and Taiwan. These customers and merchants can be onboarded on Sea’s digital financial services if it builds a layer on top of Shopee, or even Garena, its games business. Indeed, an executive within Shopee, speaking on the condition of anonymity, likened its banking ambition to that of Paypal, the payment giant that grew out of e-commerce platform eBay.

There are no guarantees, though, others argue

“Investors believe in the story, and we can raise the $1 billion [required for a licence] in a heartbeat even though we are admittedly not profitable yet,” the executive says of Sea’s decision to lodge a solo bid.

Ant Financial, the only other solo bidder, has the same edge. It provides the Alipay payment service that sits in Alibaba’s e-commerce businesses for merchants and customers. Adding a layer of digital financial services would help it build a strong customer base from Alibaba’s Lazada and Aliexpress shopping services in Southeast Asia.

The digital wholesale banks are likely to get into corporate cash management as well as cross-border transactions, according to a report by integrated financial services provider CGS-CIMB.

Of the announced contenders for a digital wholesale banking licence, two already have or operate a digital bank: Ant Financial operates MyBank, a virtual bank in China; and the consortium of Hong Kong-based investment banking firm AMTD Group, peer-to-peer financing platform Funding Societies, and utility provider SP Group. The AMTD Group includes Chinese consumer electronics company Xiaomi, which jointly holds a virtual banking licence in Hong Kong.

This is Your Digital Banking License: Singapore Edition

Financial services were the growth story Southeast Asia’s biggest startups pitched to investors in 2019, and that would seem to align with MAS’ vision. But there are fundamental concerns around the viability of these new licences and the groups that have bid for them.

How, for example, will multi-member consortia work in unison while there is uncertainty over the immediate five-year future of many startup applicants. Then, at a fundamental level, it is unclear if digital banks can even appeal to consumers and SMEs in Singapore. “How easy is it to get a 10X improvement in customer experience? People are kidding themselves that an improved version of what exists is enough to get new customers,” a financial markets analyst told us under the condition of anonymity for fear of upsetting the licence bidders.

The impact of digital banks on the three traditional local banks—Development Bank of Singapore (DBS), the Overseas Chinese Banking Corporation (OCBC), and the United Overseas Bank (UOB)—is expected to be limited. A forecast by brokerage firm Maybank Kim Eng sees digital banks accounting for just 1.2% of the Singapore dollar-denominated loan market share over the next three years.

Making money as a bank

Banks rely on loans as their main source of income. Customers deposit their money in banks, which provides cheap capital for them to disburse loans. For example, loans made up 64% of the total income for DBS—Southeast Asia’s largest bank—in the third quarter of 2019
A report by Blackbox Research found that 62% of respondents in Singapore were “quite interested” in moving some or all of their banking services to a digital bank. Still, the same survey concluded that 86% of respondents were satisfied with their current bank. Digital banks clearly need a workaround to navigate Singapore’s many paradoxes. And not everyone’s equipped.

Small market, odd bedfellows

Speculation on the licence bids has been rampant, and it isn’t restricted to who is in the running. Some high-profile pullouts hinted at uncertainty from bidders and the behind-the-scenes politics of consortia.

The OCBC was left at the altar when an alliance with SME-focused lending platform Validus Capital and Singaporean conglomerate Keppel Corporation collapsed. The official word? Keppel’s board is undergoing a strategic review of its operations. OCBC did not respond to our question regarding why its partners pulled out of the bid.

Things were murkier still at insurance provider Great Eastern—an OCBC subsidiary, no less—which failed to join a promising-looking consortium with Grab and telecom company Singtel, a financial industry executive tells us. A source revealed that Great Eastern had pulled out on its own, while the company and Singtel declined to comment.

Another Chinese entity, OneConnect—a tech-focused offshoot of conglomerate Ping An Insurance—also ditched its plans to bid. This was because of fears that the process may distract it from its initial public offering in the United States in December, the executive says. The listing saw it raise nearly half of its $504 million target at a slashed valuation of $3.6 billion, down from $7.5 billion in 2018. OneConnect claimed that it did not plan to apply for a Singapore digital bank licence and declined to comment on whether it opted against making an application.

South East Asia’s Potential Problem For Marketplace Marketplaces

There’s another likely motivation behind Gojek’s moves beyond Indonesia: being a nuisance to Grab. “It’s like a game: you try to neutralise your enemy, so neither of you has the advantage,” the investor mentioned above said.

By taking on Grab in other countries, Gojek aims to dilute its rival’s increasing focus on Indonesia, Southeast Asia’s largest market, accounting for 40% of its economic output. The thorn-in-Grab’s-side approach is very deliberate.

Gojek tracks a range of data that it uses to decide whether to invest in subsidies and discounts in expansion markets, a former company executive told The Ken. One of the key metrics is whether investing in local businesses will win market share and require Grab to increase its spending to keep up.

What We do at Denfex to Help Go-Jek Expand Globally

What We do at Denfex to Help Go-Jek Expand Globally

In Singapore, Gojek’s third market for expansion following Vietnam and Thailand, the strategy showed early promise. Gojek entered the city-state in November 2018 with no surge pricing and a reported 20,000 drivers on waitlist.

Though limited to taxis, the service initially seemed well-received as Gojek offered lower prices at select times during the day, according to Valerie Law, a transport analyst associated with investment research platform

Smartkarma . Gojek also gained attention “due to Grab’s missteps on the public relations side after it lowered incentives in its rewards system, and a lack of ride-hailing options after the exit of Uber,” added Law.
However, Gojek’s costly push didn’t last. The company slashed driver incentives just three months after launching in Singapore. Changes were also made on the passenger side, with a report from consultancy firm Momentum Works estimating that prices rose by around 30% around the same time.

Therein lies the problem if you want to compete with Grab. The company is backed by more cash than any other tech startup in the history of Southeast Asia. Its most recent Series H round closed out at $6.5 billion last year. That cash pile means Grab is more than able to play the subsidies game, and the company has been very keen to make that clear.

What is the Background?

That Series H round started with a $1 billion investment from Toyota in June 2018, months after the Uber deal. Grab sent out further warning shots to Gojek as the deal developed. A series of splashy announcements added new investors, including big names like tech giant Microsoft. With significant tranches of cash, most notably a $1.5 billion injection from SoftBank’s Vision Fund in March 2019, Grab built a phenomenal war chest of capital. The intent was clear: scare Gojek and put off potential investors who would fuel its business with cash.

“We want to be underfunded,” Makarim, the former Gojek CEO, told The Financial Times in an interview in April 2019. “It forces discipline. We will survive through innovation and monetisation and talent. We want to under-promise and over-deliver.”

Makarim may have been prepared for Grab stockpiling cash, but its efforts still seem to have had an effect. Gojek’s response to Grab’s huge financing push was a $2-billion mega round of its own.

 

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Even in the payments space, Gojek lacks coordination in Thailand. Its local GET service lets users load money into their account for cashless payments in several ways, including by giving cash to a driver. But, to the frustration of many, that account credit can only be used to pay for motorbike taxi rides. Its food delivery service, which is extensively marketed and seemingly more popular, must be paid for using cash.

Like Go-Viet in Vietnam, GET has struggled to make a mark in Thailand. The company’s services are limited to food delivery and motorbike taxi rides. Grab offers those services alongside private cars, licensed taxis, courier deliveries and more.

The Age of China’s Glory

Grab is the frontrunner across the Southeast Asia region. Its presence was enough to convince Uber to pack its bags and focus on more winnable battles elsewhere in the world. Today, Grab operates in around 200 cities, claiming more than 150 million app downloads to date and more than 6 million completed rides per day. Little is known of its financials, but Grab said its revenue reached $1 billion in 2018, with the figure estimated to double in 2019.

Gojek holds home-court advantage in Indonesia, where it claims to have been downloaded over 125 million times since launching its app in 2015. Across all its services, annualised transaction value has reached $9 billion, the company claimed, of which $6.3 billion comes via its GoPay service. But, it remains unclear how it calculates that figure. An internal document shared with us covering Gojek’s 2017 financial data, suggests the company double-counts some transactions—once as a ride, food delivery or courier transaction, and then again as GoPay if the booking is paid for using the e-wallet—which would inflate the final number significantly.

What is more clear, however, is that Grab is increasingly encroaching on Gojek’s turf. In 2017, Grab doubled down on Indonesia with a $700 million investment commitment, which was boosted by a further $2 billion in 2019. Beyond figures, its operations have shifted, too. Its second headquarters are in Indonesia, and CEO Anthony Tan is said to spend 70% of his time in the archipelago.

“Regardless of how it expands, Gojek needs to remain strong in Indonesia, a market that on its own already drives success in the region,” said Yinglan Tan, founding managing partner at Insignia Venture Partners. Instead of going head-to-head with Grab, Gojek may focus on certain services that work across Southeast Asia, such as logistics and cross-border payments, added Tan.

Thorn in Grab’s side

For Gojek to replicate its Indonesian ride-hailing empire—where it claims to have over 2 million drivers—elsewhere was always going to be a challenge of the highest order. But it appeared a necessary one in post-Uber Southeast Asia.

An investor in one of Gojek’s subsidiaries said Grab had successfully used its regional growth story to secure funding from investors through the years. Now, Gojek appears to have adopted the same approach, the investor added.

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Competition has now gotten stiffer with TPG Telecom launching its postpaid plans on 31 March. Subscribers can get 50GB of data for S$10 (US$6.99) a month, pushing the notion of cheap data and a price war even further.

In all this, the Circles-M1 tie-up, stuck at no. 3, is doing little to change the Singapore telco landscape. In fact, M1 has taken on another MVNO, Geenet Mobile, on its network after holding off for four years.

Going round in Circles

Singapore wasn’t the only market Circles wanted to capture though. And in that ambition, Circles went further than it could afford to.

Circles raised an undisclosed Series C funding round in February 2019, led by venture capital firm Sequoia India. Armed with these funds, the company was ready to make big investments. More than $50 million for each new market launch, as well as $25 million into Circles-X, its proprietary software platform. It went to Taiwan and Australia, with the promise of three more markets in the future. It is currently preparing to launch services in Indonesia.

The MVNO also put S$25 million down for the Bengaluru centre.

Taiwan and Australia are local moves. The combined market—with 29.3 million and 28.3 million mobile phone subscribers, respectively, as of 2018—dwarfs Singapore’s 8.6 million, whilst retaining similar consumer dynamics.

“Circles.life has carefully chosen these markets where individuals are more comfortable transacting online and rely on digital means more than the physical means,” said IDC’s Batra. “It falls in line with [its] strategy to have a lean footprint and operational costs by not having stores, etc.”

Taiwan looked like a smart choice—Circles claimed in a press release that over 84% of Taiwanese are online shoppers and 64% of them prefer to shop on their mobile devices. Over 80% of Circles’ users signed up via the MVNO’s website at launch and, publicly, it looked like a success.

However, behind the scenes, Circles was hamstrung by its partner in the region, Chunghwa Telecom, and had little leeway with regulations, according to the previously mentioned person. “It couldn’t do promos, or price changes, basically couldn’t do anything. For Taiwan, it underestimated the customer’s behaviour and the partner,” the person added.

Circles offered the same old promos and features in Taiwan as it had in Singapore—cheaper data, no lock-ins—but it was no first-mover in the region. Line Mobile and Ibon Mobile were already established players in Taiwan.

Eventually, the axe fell on its near-50-strong Taiwan team. While reports of layoffs only came out in February 2020, the same person quoted above revealed they’d started in September 2019. First, the operations and customer service people were let go, a second batch was fired just a month later, and a third batch was laid off in February. Even the general manager of Circles’ Taiwan operations wasn’t spared, with a replacement hired soon after.

In Australia, it was a problem of plenty—this is a market with 22 other MVNOs. And when the promos stopped, customers left as well, said the person. “They didn’t have anything unique to offer.”

 

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The MVNO has also been consistently loss-making since its inception. According to company filings, between May-Dec 2017, Circles reported a loss of S$5.6 million (US$3.91 million), which widened to S$8.6 million (US$6.1 million) for the year ended Dec 2018. These heavy losses come despite revenues of S$68.5 million (US$47.9 million) for 2018 and S$31.9 million (US$22.3 million) for 2017.

Circles did not report its financials for 2019 at the time of publishing. It also declined to participate in this story.

It’s the worst time to be flailing. There’s competition rising all over—more MVNOs are in the market, while incumbent telcos are employing new tactics like cheaper data, data rollovers and no lock-ins. From changing the rules of the game, Circles is now playing catch up. While marketing has been the company’s strong suit, its out-of-the-box marketing stunts can only take it so far.

Once positioned to upend the telco market, Singapore’s biggest MVNO is now performing a high-wire act.

Old tricks, new game

Singapore is an outlier in the Southeast Asian region, with mobile penetration above 100%. This makes it a potentially lucrative market for mobile operators. In fact, new telco entrant TPG Telecom wanted to use Singapore as a testbed for its Australian operations, as we previously reported.

Circles’ ploy for a Singapore takeover was simple. Cheap data.

The first plan launched by Circles gave customers 3GB of data for S$28 (US$19.57) a month. In comparison, Singtel was offering 3GB for S$62.90 (US$43.96) a month back in 2016.

Soon enough, almost all incumbents started offering more data as an add-on to current plans. For instance, Singtel offered subscribers twice their current free data allocation for an extra S$5.90 (US$4.12) a month.

Handset subsidies

Before long, telcos were eschewing one of their biggest customer draws—handset subsidies to offer SIM-only plans. Handset subsidies come with a 12-month or 24-month contract for a cheaper upfront cost for a smartphone. Termination of the contract early would result in financial penalties, incentivising subscribers to renew contracts for newer phones.

Things got worse as features that Circles introduced in 2016 became standard across the telco industry. Prices plummeted as telcos raced to match each other’s SIM-only plans and features.

In June 2019, the scales tipped. Telcos announced monthly excess data rollover and, suddenly, Circles found itself following suit, instead of leading from the front.

Circles’ troubles come at a time when it’s surrounded by MVNOs in Singapore. Nine—Zero1, RedOne, VivoBee, MyRepublic, GridMobile, ViviFi, Geenet Mobile, CMLink SG—excluding the now-defunct Zero SG, which lasted all of two years.

A person familiar with Circles noted that it had an easy model to copy. As telcos got involved, it became a price war. “Circles’ unique sales proposition was giving power back to the customers, which, customers say, is true,” said the person. This meant understanding customer demand and delivering. For instance, Circles had a WhatsApp and instant messaging add-on to its data pack. This meant customers could use WhatsApp without exhausting their data.

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Since Covid-19 is a new disease, Digit didn’t have past data on its severity and escalation. So, the insurer studied other infectious diseases like SARS and looked at how it had panned out in the affected nations, added Chaturvedi.

As a fixed-benefit product under the sandbox regulations, the liability of Digit’s policy was predetermined. IRDAI sets limits on the sales of a product under the sandbox: sell for either six months, or till you sell 10,000 policies, or sell upto Rs 50 lakh.

“We hit the Rs 50 lakh limit in about three weeks, so we had to stop it,” said Chaturvedi. “We are now looking at the data to see if we want to launch a retail product [outside the sandbox].”

Digit’s Covid-19 policy was the only retail product in the market for three weeks. Most companies have only launched group policies with fixed benefits to limit their risk. A retail insurance policy is bought by individuals, while a group policy is typically offered by companies to its employees as a health benefit. Retail insurance is more robust than group insurance, as the retail policies come up for regular renewals and are not subject to as much pricing pressure as group policies.

“We are seeing how the disease progresses before launching retail products,” said Sanjay Datta, chief underwriting officer at ICICI Lombard. The insurer has launched a plan where it sells Covid-specific cover through companies like e- commerce retailer Flipkart. “We are planning to limit the number of policies sold. These are hard to get right,” Datta added.

Like Digit, other companies have also studied the epidemiology of diseases similar to Covid-19, such as SARS and H1N1, to come up with pricing for their policies. But these diseases were far more contained than Covid-19, making this pandemic particularly hard to price.

Ayushman Bharat

The Indian government’s scheme, which gives free health insurance to 500 million people, is going to add to the burden. The government usually pays the premium to private insurers. “We are anticipating an increase in the volume of claims from this route too,” said an executive at HDFC Ergo.

Uncalculated risk

Star Health’s Dr Prakash says the incidence of Covid-19 is higher than any respiratory-related illness. To remove uncertainties, insurers have gone the fixed-benefit route. They pay a fixed lump sum on detection of Covid-19 rather than covering the cost of treatment. But there’s a big risk here: if the incidence rate is miscalculated, insurance companies may face a massive number of claims.

“Covid-19 covers are a bad idea for insurers unless they have a definite strategy of quick scaling and also upselling their base plan,” said Jayan Mathews, co-founder of Vital, a platform for health insurance and financing. He was the former product head at Apollo Munich Health Insurance, before it was acquired by HDFC Ergo in January. “If they don’t get the adequate numbers quickly or ensure they have the correct risk premium, they won’t have a diversified enough portfolio to bear the concentration of risk.”

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Insurers are hoping that the Indian government sets a cap on the Covid-19 treatment cost like it did with testing. If that doesn’t happen, insurers are in for a wild ride. But even in the absence of such an assurance, some insurers have already taken the plunge by launching Covid-specific covers. What gives?

The disease-cover route

The biggest problem for India’s insurance sector is people’s fatalistic belief that it won’t happen to them. Not many want to spend on a premium of Rs 10,000 a year for something they don’t consider likely. And even many of those who buy a policy look at it as a tax-saving instrument.

Employers, too, purchase coverage for their workers—usually group policies—but these cover expenses of only around Rs 1-3 lakh ($1,312.7 – $3,938.3)—a sum that would only partially cover a major hospitalisation.

Instead, insurers find it easier to nudge people into buying insurance via disease-based coverage. Like a dengue-specific policy if monsoons are severe where you live; a diabetes or cancer care insurance if you are genetically predisposed to it. In general, critical illness policies that cover for cancer sell more than infectious disease policies, said Dr Prakash. People also tend to renew critical illness-based covers more than a dengue cover.

Yearly premiums for such policies are less than Rs 1,000 ($13.13), while offering significant coverage. Moreover, a diabetic person wouldn’t be allowed to buy a general health insurance policy even if they wanted one. But that’s not the case with disease-based covers, which can be bought even by people who are already suffering from a disease.

For insurers, disease-based covers are, in theory, good products to sell as their loss ratios are lesser than those of general health insurance plans. This makes them a favourable proposition for insurers.

However, they are still not profit-making products, according to the senior executive quoted earlier. For starters, they only really sell online, and usually as add-on products. Insurance agents, after all, earn commissions on policies sold, so low-ticket products aren’t something they care to flog. The problem with selling digitally, though, is that most insurers say they don’t have the budget for digital marketing. As a result, insurers generally view these policies as a way to get a foot in the door to upsell general health insurance coverage.

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Take Digit, for example. Its Covid-19 policy is a way of promoting its recently launched health insurance product. Call it foresight or just plain luck, Digit had filed for need-based insurance for health under the IRDAI’s sandbox regulations and had received an approval in January 2020.

“While we were contemplating the best manner to project this sandbox application, we witnessed the rapid increase of this disease in India,” said Vivek Chaturvedi, head of marketing at Digit. “We finalised on the modalities and documents, and it took us about two weeks to launch the policy. All we had to do was change the variables [like frequency and severity of the disease] in our database and we had a new product.”