Digit Insurance’s brief stint in the Indian Insurance industry has made it a trailblazer among Insurtech startups. It has been barely six years since Digit sold its first insurance policy, and it is already one of the recognisable brands in the industry. In 2021 it joined the august league of Indian unicorns, becoming the first Insurtech startup to be valued upwards of the billion-dollar threshold. This makes Digit Insurance a startup success story that we are tempted to look deeper into.
Delhi University alumni and former insurance executive Kamesh Goyal founded Digit in 2016. The company received regulatory approval from the Insurance Regulatory and Development Authority of India (IRDAI) in September 2017. Before becoming the founder and chairman of Digit Insurance, Mr Goyal worked for German insurance giant Allianz for over 17 years. This included two stints as the CEO of Bajaj Allianz Life Insurance and Bajaj Allianz General Insurance respectively. He also has nearly 10 years of work experience with the New India Assurance Company Limited. Perhaps through Goyal, Digit Insurance's top brass has a strong presence from the Allianz/Bajaj Allianz fraternity.
With Digit, Mr Goyal wanted to simplify insurance, and make it comprehensible even for a teenager. He noticed that insurance in India is wrapped in jargon and processes that confused the common policy buyer. This uniqueness can be regarded as one of the key features of the startup that helped its fundraising rounds. It is estimated to have raised over $540 million, with backing from Fairfax Group, which is owned by Canadian billionaire Prem Watsa. Other investors of Insurtech include Sequoia Capital, A91 Partners and Faering Capital. Institutional investors also include TVS Capital Funds and India Infoline. Cricketer Virat Kohli is one of the angel investors of the company.
We must remember at this point that insurance penetration in India is very low at around 4.2% of the population. Out of this, 3.2% is in the life insurance segment. There is immense growth potential in the insurance sector, and Digit has been quick to grab its slice of the pie. The company managed to book a gross written premium of Rs 2,252 crores in FY20, followed by Rs 3,243 in FY21. With more than Rs 5,268 crores in gross written premium in FY 22, Digit posted Rs 5k crore in less than five years.
To drive home its focus on simplicity, Digit Insurance has deliberately designed its products to be customer-centric. At a time when other insurers stopped giving coverage for COVID issues, Digit launched coronavirus cover health policies.
Digit Insurance also focuses on pan-Indian penetration, rather than achieving the proverbial quick wins in Tier-I and II cities. 10% of its revenue is generated from rural areas (Tier-IV+). It has sold or processed at least one policy in 99.56% of all PIN codes in India. Digit offers its products on its app, web portal and through its distribution partners. While it achieves a wider reach on one side, it also garners strong reviews on social media from digital customers. It also interacts with its customers across multiple vernacular Indian languages. As a whole, it puts Digit Insurance on a sound footing both in the offline and online domains.
Digit Insurance’s competition in this sector includes startups like Acko, Coverfox and Policybazaar.
While we have touched upon the key highlights of this Insurtech unicorn, here are a few strategies that have served Digit Insurance right since its arrival.
Simplicity – Digit has simplified the insurance process and made it more transparent for the policy buyer. They have gone the extra mile to simplify the policy language and provide clarification to the customers on policy terms. This made them a more approachable option, particularly for first-time policy buyers.
Digit(al) Insurance – Digit has reduced paperwork and made the user experience more free-flowing. They achieved this with their digital-first approach that leverages technology to streamline internal processes make policy selections and purchase a convenient experience for the customers. This experience also extends to query resolution and claim settlements.
Policy innovation – Digit has been innovative in its products and tried to address customer-specific needs through its policies. They have added flexibility to their policies to make them suitable for different demographics. It is forming partnerships with major travel companies to boost its travel insurance sales.
Presence and reach – Apart from its aforementioned geographical presence, Digit quickly built a diverse product portfolio to include motor insurance, health insurance, travel insurance, fire and property, jewellery and more. This diversification allowed them to cater to a broad customer base and address a variety of insurance needs.
Among the recent developments is Digit’s preparation to get itself listed. The company is IPO-bound as it refiled its draft red herring prospectus, addressing concerns raised by IRDAI. The IPO bid is pending approval, and once approved it will see a fresh issue of Rs 1250 crores and an offer for sale of Rs 10.9 crores.
With its financials improving with every passing year, Digit remains an inspiration for Insurtech startups and the India startup story.