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These top-funded insurtech startups are changing how India buys insurance cover

Tarush Bhalla
1st Aug 2018
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Innovative and new strategies accompanied by a funding out pour is helping drive growth of the insurance technology sector, and these 5 startups are leading the charge.

Over the past year, insurance technology, or insurtech, has seen some massive investments. This is being attributed to the massive opportunity. According to a PwC report, life insurance penetrated only 2.6 percent of the country’s population in 2015, offering startups a huge business opportunity.

However, according to another report by PwC, the gross premium written in India was around $68.8 billion in 2016, growing at 10.49 percent compound annual growth rate (CAGR). The same number stood at $75.65 billion in 2015. When it comes to life insurance, the total penetration reduced more than 40 percent in 2015 from 4.4 percent in 2011.

The Tarun Ramadorai Report of Household Finance Committee, released in August last year, says erratic income in India makes it non-lucrative for households to subscribe to this financial product. As many as 50 percent of households interviewed indicated insurance products were unaffordable, and only 16 percent stated a lack of awareness.

But with multiple startups doing well in the space over the last year, innovative strategies are helping drive growth. We take a look at some of the highly-funded startups in this space:

Yashish Dahiya, Co-founder and CEO, PolicyBazaar

PolicyBazaar

Parent company: ETechAces Marketing & Consulting Pvt Ltd

Last funding (in parent brand): more than $200 million (Series F round in June 2018)

Founded in 2008, the Gurugram-based company is backed by SoftBank, Tiger Global Management, PremjiInvest, Temasek Holdings, and IDG Ventures India among others. In June, PolicyBazaar became a Unicorn when parent company ETechAces Marketing & Consulting Pvt Ltd raised $200 million. Founder Yashish Dahiya has said that a majority of the investments will be used to build their new telemedicine business DocPrime, which will also act as a cross-selling platform to leverage PolicyBazaar and PaisaBazaar’s (the group’s lending arm) products. Insurance will be cross-leveraged as a subscription to cover OPD costs in hospitals while helping connect individuals to doctors.

Vijay Shekhar Sharma, Founder and CEO, Paytm

Paytm

Registered entity: Paytm Life Insurance Ltd and Paytm General Insurance Ltd.

Parent company: One97 Communications Ltd.

Last funding (in parent brand): more than $1.4 billion (in May 2017)

Paytm, which began operations in 2010 as a digital wallet service, has now diversified into financial services, and is looking strongly to cash in on insurance premiums. In February, Paytm registered two insurance entities, Paytm Life Insurance Ltd and Paytm General Insurance Ltd with the Registrar of Companies (RoC). The paid-up capital in both these entities is around Rs 10 lakh each. The Noida-headquartered company, founded by Vijay Shekhar Sharma, is registered under parent company One97 Communications and backed by SoftBank, Alibaba, ANT Financial, and SAIF Partners among others.

(L-R) - Prem Watsa, Chief Executive of Fairfax Financial; Kamesh Goyal, Chairman, Digit Insurance

Digit Insurance

Parent company: Digit Infoworks

Last funding (in parent brand): $44 million (in July 2018)

Owned by Digit Infoworks, Digit Insurance has raised $94 million from investors, including one of the biggest insurers of Canada, Fairfax Financial, which holds close to 35 percent stake in Digit Insurance as of May this year. The Bengaluru-based company started operations in 2017 and insures a range of products across categories like motor, travel, and jewellery. It has also partnered with ecommerce players like Paytm and Amazon to provide insurance for electronics and handsets. In the coming months, Digit Insurance plans to launch categories such as two-wheeler, international travel, health, and home insurance.

Coverfox

Parent company: Glitterbug Technologies Pvt. Ltd

Last funding (in parent brand): $22 million (in April 2018)

Founded in 2013 by Varun Dua and Devendra Rane, this Mumbai-based startup has raised around $40 million so far from investors including IFC (sister organisation of the World Bank Group), Transamerica Ventures, SAIF Partners, Accel, NR Narayana Murthy, and Catamaran Ventures. Coverfox claims to have integrated with more than 35 insurers, and offers more than 150 policies in motor, life, and health insurance. It plans to expand insurance coverage into Tier II and Tier III cities, and address women’s needs as it tries to diversify its product portfolio. Coverdrive, Coverfox’s Android App, helps insurance agents go digital and grow their businesses.

Varun Dua, Founder of Acko General Insurance had previously co-founded Coverfox

Acko General Insurance

Last funding (in parent brand): $12 million (in May 2018)

Incorporation date: 2017

Backed by investors such as Amazon, Accel, SAIF Partners, Catamaran Ventures, NR Narayana Murthy, and Kris Gopalakrishnan among others, the insurance startup launched by Varun Dua raised eyebrows in May 2017 for raising $30 million in seed investments even before it started operations. In May 2018, Mumbai-based Acko General Insurance raised another $12 million. The startup lists customised solutions as its differentiator along with technological interventions and lack of dependency on other distributors to sell the product. Interestingly, Acko is the third company in the insurance space to have SAIF Partners as one of its investors.

While much work is being done by these startups, there are other smaller players trying to increase insurance penetration in the country. There is GramCover, the insurance marketplace for rural India; and Ronnie Screwvala-backed Easy Policy. Other marketplaces include Mumbai-based TurtleMint, Gurugram-based health and motor insurance marketplace Renew Buy, and Kolkata-based Gibl.in and Insure First.

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