AegisCovenant Has a Clever Solution to Delivery Commitment Issues in Vehicle Insurance

AegisCovenant Has a Clever Solution to Delivery Commitment Issues in Vehicle Insurance
AegisCovenant Has a Clever Solution to Delivery Commitment Issues in Vehicle Insurance

In the financial year 2023, an impressive 15.9 million two-wheelers were sold in India, which shows the burgeoning potential within the two-wheeler insurance sector. Sonendra Verma, the founder of AegisCovenant, is capitalizing on this promising realm with his unique B2B insurance products sold to automotive dealers directly instead of end-consumers.

AegisCovenant offers a spectrum of services such as roadside assistance, insurance management, and vehicle leasing for OEM dealers, with a proprietary tech platform. The bootstrapped venture now services over 1.25 million customers and has tie-ups with auto dealers of popular brands in India like Bajaj, Honda, Suzuki, and TVS.

In an exclusive conversation with ProdWrks, Sonendra Verma delves into the inception of AegisCovenant, his philosophy of designing b2b two-wheeler insurance products, and sheds light on the role of technology in their venture.

The Ignition For an Entrepreneurial Journey

Sonendra’s entrepreneurial aspirations commenced in 1998 at age 18 as he tried balancing an early marriage, fatherhood, and a budding career. Having a childhood fascination for biking and a natural inclination towards finance, he started his career as a direct selling agent (DSA), giving auto loans for HDFC, ICICI Lombard, and Reliance General Insurance.

A turning point in his life came when he participated in a bike design competition held at Rider Mania 2011 by Royal Enfield and won the best custom bike design category. Sonendra says that the many months he spent designing and engineering parts for the bike, taught him a valuable entrepreneurial lesson.

Sonendra said, "Even though I had no formal education in the automobile sector, I learned things one by one. I understood that it's difficult to build a company when you don't have the resources or a product niche."

With an ambition to find his niche in the automobile sector that he was so passionate about, Sonendra decided to venture into the auto insurance space, working at Tata AIG, Reliance, and ICICI Lombard, and absorbing everything there is to learn about vehicle insurance. Soon, his career graph skyrocketed, and he became the National Head of Cover Fox Insurance.

With the experience he gained working with major auto insurance players, Sonendra founded AegisCovenant in July 2020 as a bootstrapped venture, which it remains till this date. He managed to grow the company from 8 people to 80, without any external funding, and served 1.25 million customers till date.

Building an Ecosystem in Two-Wheeler Insurance and Finance

Sonendra’s core philosophy – the problem is everything, the product is nothing – made him look for problems others had overlooked in the vehicle insurance space. The problem they identified led to their first insurance product tailored to provide roadside assistance (RSA) to two-wheelers, especially electric vehicles (EVs).

EV vehicle

Sonendra stumped us with his sound logic when we doubtfully asked why people would be inclined to buy RSA + insurance for two-wheelers at a time when most people are skimping on the additional cost of the add-on policy, even for cars.

“It’s true that mostly private car owners used to buy roadside assistance. But that is changing with EVs as the battery range of two-wheelers is a big problem. Once we identified the problem, we immediately launched RSA as we wanted to have the early mover advantage,” he explained.

Sonendra also strategically chose to deliver insurance through the B2B route by collaborating with two-wheeler dealers directly; deviating from the common B2C insurance approach, it involves a lot of cash burn on ads and marketing, competing with more prominent players.

Soon after introducing RSA, Sonendra said they also launched their Insurance Management service. Once again, they preferred to focus on two-wheeler EVs.

"In EVs, most of the parts are chip-based. Roadside mechanics won't be able to fix them. So, this is a perfect space to be in, as everyone will be servicing their vehicles directly with the car dealer's official service centers. And AegisCovenant is tied up with all major two-wheeler dealers directly to provide insurance and add-ons."

Solving the Insurance Sector’s Delivery Commitment Issues

What truly sets AegisCovenant apart from other insurance players is its mission to address the insurance sector’s delivery commitment issues.

"After all, our company's name is AegisCovenant; Aegis means protection, and Covenant means agreement. This means you are offering a commitment agreement in the service industry, and that's what we try to deliver. That's our philosophy," says Sonendra.

To ensure commitment to deliver, Aegis created an insurtech platform with a unique cut-and-pay model.

“We created the first tech platform in India that operates on a cut-and-pay model because payouts don’t arrive on time in the insurance industry. So we created a model where the insurance players give us a token advance of the premium amount, and we also issue the insurance well in advance to the dealers so that they can honor the commitment to delivery to their customers.”

In this process, the Aegis platform solves two other problems – For the dealers, it cuts the time for issuing insurance, and for Aegis, it improves cash flow.

Explaining the benefits, Sonendra said, “In a single day, a vehicle dealer delivers 50 vehicles. Their primary job is to sell cars and not insurance. So, we designed the platform in a way that it doesn’t take more than a minute to issue a policy for the dealers. The real-time cut-and-pay system also significantly improves cash flow to AegisCovenant as we get half the insurance premium amount as advance, which doesn’t usually happen in the insurance field,”

Thinking Beyond Insurance

Sonendra’s vision extends beyond insurance – he aspires to build an ecosystem around two-wheeler financing, ensuring profitability with each sale through cross-selling.

"We cross-sell to leverage our existing customer base, recognizing customers' frustration when dealing with various service providers. We strategically combine roadside assistance with insurance and other complementary services, presenting a comprehensive package to customers at a nominal cost. We create a value proposition that is hard for customers to decline."

Today AegisCovenant has also expanded to provide digital marketing and product development services focussed on insurance and finance-related products in the automotive space.

"The journey from insurance and vehicle leasing to digital marketing and product development was driven by the necessity to align with evolving market demands. We work with vehicle dealers and build insurance and finance-related products for them by leveraging our expertise. This diversification was not a deviation from our core focus but a strategic enhancement to our primary services."

Vision for the Future

When questioned about future plans for AegisCovenant, Sonendra expressed, “We aim to leverage technology alongside referral marketing systems, fostering a unique model where positive actions are rewarded. This initiative of ours seeks to counter the negativity often associated with social media and cultivate a positive ecosystem.”

Looking ahead, Sonendra also revealed the company’s significant investment in in-house product development, boasting a tech team comprising 40 out of 80 team members.

“Aegis Covenant will venture into a comprehensive B2B dealership, catering to both private cars and commercial vehicles, covering a wide array of products. We want to target B2B agents, B2C markets, corporate customers, and collaborate with banks to source insurance - a strategic move towards creating a comprehensive 360-degree product offering.”

This future-focused approach reflects Aegis Covenant’s commitment to innovation and adaptability in the evolving landscape of the insurance sector.

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