Will the Zerodha-owned insurance agent Ditto disrupt the insurance market?

In the insurance market, the founders hope to repeat their success with Finshots, a financial newsletter with a membership of over 4 lakh readers, launched in August 2019.

Ditto now has a team of 30+ instead of agents it calls insurance consultants. It leverages Finshots newsletter subscriptions of over 4 lakhs and a large word of mouth readership to grow its subscriber base. It also has a USP which the founders say is similar to that of Zerodha – customer first rather than insurer first. Customers can schedule spam-free calls with insurance consultants from the Ditto website and get an opinion on their existing policies. Likewise sells (advises) life and health insurance. However, in the life category, Ditto recommends only term insurance rather than high cost endowment policies.

“We don’t want to follow an aggressive push model. We want clients to recommend us to their friends. So our advisors make an average of only 8 calls per day compared to 50-100 calls from other brokerage companies – companies. In fact, we already have a waiting list of 6-7 days for scheduling calls. In the initial days, we (co-founders) used to take calls directly,” Bhanu said. “When my father fell ill, I found out that his insurance policy was completely inadequate. This made me research this area and identify the need of a pressing client,” he added.

A thorny issue for similar co-founders is that of commission. Insurance brokers have an incentive to recommend schemes with huge commissions and these incentives can influence Ditto as well. According to Karkera, he will discipline Market Ditto against following this path with negative reviews and angry customers to prevent any drift towards High Commission policies.

Also, unlike mutual fund commissions, insurance commissions are opaque – policyholders are not informed how much is being paid. However, Karkera argued that the pricing for the commission-based and ‘direct’ plans remains largely the same, leaving little difference for customers. This is different from mutual funds, which have different cost of funds purchased from distributors versus funds purchased directly. The commission in insurance is also high. Sector regulator, IRDA, pays commission on 15% of premium in health insurance and 20-40% of premium in term life insurance.

In addition to the commission, Ditto also faces some growing pains. An online review by a competitor reported that multiple advisors were logged into its mystery shopper calls, causing confusion for the customer in the call. “It was only because we had a senior mentor accompanying the trainee – to correct and guide him,” Karkera explained. Another competitor who wished to remain anonymous, added, “There are players who are already publishing the top 10-15 products based on research and methodology on their websites and newsletters. The process is not new, but packaging is. “

Ditto is transitioning from a corporate agent license whereby it can recommend a full broking license to a maximum of three insurance companies in each category (life, general and health) where there will be no such limit. This may help address some of the concerns surrounding commission-driven recommendations or limited coverage.

However, the founders intend to keep it simple with only a handful of insurers per category. The USP may be the determining factor in their success in the insurance market. “This venture has been on our list for a long time – how to sell insurance the right way. So when Finshots got the idea we thought it was a no brainer. We saw how passionate they are about Finshots And how well it has done it. This is an opportunity to simplify insurance and replicate the Zerodha model in this market,” said Nithin Kamath, Founder and CEO, Zerodha.