Google's India Stack & Prime Health Insurance.
Decoding Google's strategy (in light of the upcoming Policybazaar investment) and Amazon Prime with Insurance (again)
Hello folks! Getting you some big Tech action in the Indian insurance market this week! Let’s dive right in..
Google to invest in Policybazaar
Less than a month ago, Policybazaar announced its intention to raise ~ $500M via an IPO in September 2021 at a $3.5bn valuation [1]. This valuation is x2.33 its previous round valuation of ~$1.5bn.
Policybazaar raked in $540M in premiums [2] for FY 20 after a bumpy FY 19 (which saw branding expenses cause marketing spend to rise x23 YoY!) It is an interesting time for Google to deploy $150M into Policybazaar at a $1.5bn valuation since they have just ploughed $4.5bn into Jio. [3]
My thesis here is covered within the “Google Stack” (India) image below
Beginning from the bottom up, here’s a summary of my thoughts:
Hardware layer - At the same Annual General Meeting where Google announced its $4.5bn investment into Jio, there was a joint announcement that Jio & Google would work on a new (Android) Operating System for low-end 4G/5G smartphones (that will be manufactured by Jio). [4]
Mobile network layer - By investment proxy and Operating System access, Google will (in the long run) be able to tap into Jio’s ~ 387.5M customers [5]
Identity layer -
Google can tap into the Government identity infrastructure (i.e. Aadhaar) for financial services (e.g. lending, payments & insurance).
You’ve probably use “Sign in with Google” somewhere - Google has an “alternative identity” for everyone; more data for underwriting models to crunch.
Payments layer -
GPay is a dominant player with ~ 38.4% market share [6] in Unified Payments Interface (UPI) transactions - India’s public payment rail. GPay also boasts of 75M customers with 540M monthly transactions!
Account Aggregator layer (Open Banking) -
By proxy of its Jio investment, Google will be able to access Open Banking (in-house) via Jio’s Account Aggregator (AA) licence. Note: the AA access isn’t exclusive but has been highlighted for completeness of the Google India stack.
Under the DEPA framework (analogue to GDPR), AA’s act as consent managers for financial data - Google will (as we shall see below) be able to tap into such data for lending & insurance.
So, Google has “stack control” on all layers beneath financial services (e.g lending & insurance)
The monetization layer -
Lending: GPay inked a deal with FinTech lender ZestMoney in June [7] and should be able to leverage India’s open credit protocol - OCEN in the coming years.
How would this work? Google as the Derived Data Provider (alternative lending score data); Jio as the Account Aggregator (consent manager to route the user’s financial data) and OCEN as the protocol to tap into a lending network.
Insurance: Here’s where Policybazaar comes in - GPay doesn’t have any insurance partnerships [7]; Policybazaar would act as the “protocol” for insurance.
Via its brokerage licence, Policybazaar is able to source capacity from any Indian insurance company. Furthermore, Policybazaar’s extended tenure implies it is well rooted in digital insurance sales processes in India!
My thesis rests on “Policybazaar as Google’s insurance protocol” in India; it helps Google close the loop on its users financial life - payments, lending & insurance.
Let’s pause for a short break here; if you’d like to familiarize yourself with India’s newly launched credit protocol - OCEN and the hypothetical insurance version I’ve proposed, do check out my previous piece:
If you’ve read the above piece - if OPEN does come about, it will be ~ 10 years away, Policybazaar would act as the bridge to the post-OPEN world; until then, it is a terrific investment for Google; not to mention, Google could feature quotes from Policybazaar in your search results (albeit it might trigger the Competition Commission of India).
The Bezos Brigade (Amazon)
With its investment in BankBazaar (credit marketplace) and Acko (insurance company), Amazon India is anything but a silent observer. Early readers may recall my post on Amazon Pay launching motor insurance with Acko.
Recent news: Amazon has launched Amazon Pharmacy in India
The infographic below highlights Amazon’s healthcare ventures in USA (adapted from a previous deck I used)
Clearly, there are some similarities - Plug & Play Healthcare by Amazon is a possibility.
To understand the set-up here, I will dive into each element briefly:
Acko
Acko is an Amazon portfolio company; with its general insurance licence, it can design & underwrite health insurance products.
The company has an appetite for product innovation (e.g. tips-based insurance premium contribution for Shadowfax delivery partners(
Amazon Pharmacy
Launched yesterday, this e-pharmacy service will deliver drugs to customers doorsteps (leveraging Amazon’s reach & infrastructure).
Amazon Pay
I could forsee Amazon Pay offering an EMI (Easy Monthly Installment) set-up for consumers unable/unwilling to meet their Out-of-Pocket spend upfront.
The lending capital for this financing could be made available by a dedicated partner or via lenders on boarded into the OCEN lending protocol.
Swasth was founded as a Not-for-Profit organization of Tech companies looking to address the Covid-19 healthcare crunch; Amazon employees are contributing to the efforts here.
Whilst SWASTH reflects the capability of India’s nascent National Health Stack, it also highlights that Amazon has an active functional relationship with providers:
Teleconsultation
Hospital facilities
Diagnostic labs
Wearables
Therefore, Amazon actually has all the elements to offer AWS for Healthcare (for SMEs) or a comprehensive Amazon Prime Health Insurance (Kaiser Permanente style i.e. payer-provider integration albeit loosely).
With my usual unhealthy dose of speculation this week, I look forward to your thoughts, comments & feedback. If you found this interesting, please feel free to share it forward or subscribe if you haven’t already!
If you’ve made it this far, I’ve recently started posting one Tweet summaries of sectors/thoughts that are outside of insurance but which are linked nonetheless:
And, this time for real, that’s all from me - hope you have a fantastic weekend!