Insurance Industry
Jun 30, 2021

Merits Of Enabling One-Click Payments

One in every 4 insurance companies in India uses Compass. An empirical account of how an insurance company brought about direct savings by enabling one-click payments and timely payout of incentives.

The insurance company, as a practice, awards non-cash incentives (via sales contests) to insurance advisors while achieving their targets/sales quota. 

Before Implementation of Compass

The company procured gift cards like Amazon, Flipkart, Tanishq, MakeMytrip, etc in advance. The discounted value of each gift card is different and the average discount value for the brands calculated is 6.5% (on purchased values). Below is the calculation of the Gift card purchase. The frequency of purchase has been mostly monthly. 

Particulars Time Period Quarter 1 Quarter 2 Total Billing Notes
Total Value of Gift Cards July 19 to Dec 19 10.59 12.37 22.96 in Crores
Discounts on Gift Cards July 19 to Dec 19 6.50% 6.50% 6.50% in%
Before Automation (Final Billing) July 19 to Dec 19 9.89 11.67 21.56 in Crores

Now (After the Implementation of Compass)

The company enabled one-click payments via Mobile App for all users. The users could now go to the app and select the gift card from Amazon, Flipkart, MakeMyTrip, BigBasket, etc. of their choice and at the time of convenience. Below are the calculated values of the payments made.

Particulars Time Period Quarter 1 Quarter 2 Total Billing Notes
Post Automation (Total Recharge) Jan 20 to J2une 20 11.86 11.36 23.22 in Crores
Balance Points (as of July 01, 2020) Jan 20 to June 20 0.82 in Crores
Total Recharge (Max Assumed) 24.04 in Crores

Net Savings 

The company's business grew by ~28% as compared to the last half-year and the net incentive payout is assumed to grow at 57% of the business growth value (i.e.16% in this case). Below are the approximate calculated values. 

Calculations Headers Time Period Values Notes
A Before Automation July 19 to Dec 19 21.56 in Crores
B After Automation Jan 20 to June 20 24.04 in Crores
C Business Growth (For half Year) 28 in %
D Payout to Business Growth Ratio (57% of C) 16 in %
E = A*D Net Payout to be disbursed After Automation Jan 20 to June 20 25.01 in %
F = (E-B)/B*100 Savings 4.03 in %
G Bank Interest (For 2 Months) 2.50 in %
Total Savings 6.53 in %


Observations

1. Direct net savings of ~6.5% via enabling one-click payments. 

2. Additional savings of up to ~3.4% i.e. 0.82 lacs (INR) in case the balance points are not redeemed by users. 

3. The users are more motivated and empowered when given an opportunity to choose reward gift cards. 

4. It is assumed that a timely payout has helped the company to increase the revenue significantly. 

*Please note that there are a few assumptions considered while calculating (after a brief discussion with the customer) like payout to business growth ratio, aggregate previous discounts on gift cards etc.

S.No. Components Cost Dependency Fixed Cost (INR) Recurring Cost (INR)
1 Server & its maintenance Depends on data-streaming & frequency NA 40 to 80 / User / Month
2 IT Infrastructure Includes infra like Email, SMS, Others for notifications & nudges NA 10 to 20 / User / Month
3 Software Development 1 Data Architect
2 Software Developers
1 Software Tester
1 UX Designer (6 Months)
4-5 lacs / month (for 6 months) NA
4 Software Maintenance D1 software engineer
1 UX Designer
NA 1.5 to 2 Lacs / Month
5 Support Ticketing Depends on user volume NA 1 Lacs / Month
~30 Lacs ~ 4-12 Lacs / Month*
*Depends on the no. of users. These are very optimistic costs and can go high as much as 2-3X.


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