In an effort to become the biggest online insurance provider, Warren Buffett’s Berkshire group is leading an Indian venture that believes the popularity of social media and mobile phones will boost their business.
Berkshire India, an insurance company, sells health, motor and travel insurance products over the Internet on their website Berkshireinsurance.com. They also plan to sell various life insurance products in the near future as a corporate agent of Bajaj Allianz Life Insurance.
In 2011, the company started its operations with just eight employees. Berkshire India is a mostly owned non-direct subsidiary of Berkshire Hathaway Inc., and they currently have over 100 employees at this time.
The business has a very unique insurance sales model that they employ over the Internet, and they expect it to grow in popularity due to internet-enabled mobile devices like tablets and smart phones. They will greatly aid in cost-effectiveness to this particular business model.
“…Over half of India’s total Internet user base will access Internet solely through mobile or tablet devices by 2015. Since our direct model of business employs telephone and Internet, we are positioned to enjoy a great advantage,” BerkshireInsurance.com CEO Arun Balakrishnan told PTI.
“We are confident of our business model and are continually developing it to make it even more efficient and cost effective,” he said.
It is estimated that India has the third-largest user base on the Internet. The total number is about 120 million people.
Berkshire India also believes that Facebook and Twitter will play a major role in their overall success.
“As we progress towards becoming the one-stop shop for insurance, our aim is not just to sell insurance but to help the customer understand the nuances of insurance. It is here that social media plays a major role… We realise that the major attraction of the online mode for a customer is a relatively cheaper pricing,” said Balakrishnan.
Berkshire Hathaway’s reinsurance business global leader, Ajit Jain, also plays a very active role in the business’s operations in India. He is also looked upon as a potential successor to Warren Buffett when he finally retires.
“Ajit Jain is a part of the Board of Berkshire India Limited and a regular participant in our discussions and formulations. Being actively involved and well versed with our operations, Jain is both aware and happy of our progress as a company,” said Balakrishnan.
He also told us that he knows the life insurance business is different to what they currently offer. But if they do their adequate research, they will be able to come up with products well-suited to the Internet market.
“Products that are both a good value proposition for the customer and viable to sell online,” he said.
“As use of mobile Internet increases, our penetration to the rural and semi-urban areas will grow rapidly given that a large part of our web traffic today stems from mobile devices. Our rural penetration is expected to closely toe that of the telecom sector,” said Balakrishnan.