Life is uncertain as unfortunate events like sickness or death could come to anyone or at any time, especially at these uncertain times of the Covid-19 pandemic. Having insurance for every significant aspect of the life assured has become especially necessary at these times to ensure that you and your family don’t have to worry about finances and have required financial planning in every circumstance of life. After all, however harder it may be, unfortunate events do not come with alarm bells, and one should be prepared to face any circumstances in life.
Despite the utter importance of insurances, the insurance businesses in India weren’t flourishing much till lately. There were limited market players in the insurance business and only a few customers could afford insurance premiums for themselves & families. Despite this, there are untapped opportunities for the growth of the insurance market in India. According to a study, the new business premium for Life Insurers has grown at a CAGR of 14% over FY14-20 led by the financialization of savings and new product launches, and the insurance industry size in India is expected to grow at 12.5% CAGR over the next decade 2020-30 led by specialized products such as protection and annuities.
An increase in education and awareness regarding financial security has given insurance businesses to grow and expand their business operations in India. Digit Insurance is a Bengaluru-based general insurance and financial services company that offers insurance products & services to its customers intending to simplify the whole process from buying insurance to claiming insurance without any hassles. Its mission is to make insurance simple for the common people through a variety of insurance products being offered through its fully dedicated online platform (godigit.com). This start-up was founded in the year 2017 by Mr. Kamesh Goyal and has its headquarters in Bengaluru, India.
The main aim of Digit insurance is to simplify the insurance process and offer availability to people and push the insurance sector forward through flexibility in services and innovation. And for fulfilling these purposes, it has entered into a strategic partnership with established and trusted businesses such as Policy Bazaar (for car insurance), Paytm (for mobile insurance), Tanishq (for jewelry insurance), and Clear Trip (for travel insurance), that ultimately helps the business to have a better customer reach and hence better customer acquisition and is available even during national holidays. Some of its offerings include insurance policies that have been simplified and made convenient to ensure financial cover to its target customers without any hassles at the comfort of their home include-
- Go Digit health insurance
- Go Digit car insurance
- Digit 2 wheeler insurance /Bike/Bicycle insurance
- Go Digit commercial vehicle insurance
- Go Digit travel insurance
- Mobile Insurance
- GoDigit Home Insurance
Since its inception, Digit Insurance has achieved tremendous growth & consumer trust and has been applauded for introducing Covid-19 insurance product providing for a fixed financial cover to its customers. It has managed to transform the lives of more than 20Lakh of customers already through the Digit Group Insurance products that also fetched a revenue of $311.83 mn (Rs 2,324 crore in FY21) making it one of the greatest fifteen insurers of India and the first start-up to become a unicorn in 2021 with a valuation of $1.9B that has reached $3.54 Billion (as on January 2022). From FY 2019 to 2020, it earned an 87% growth in its premiums and a larger consumer base of more than 1.4 crores of customers which are on an ever-increasing mode. It is backed by investors like Canada-based Fairfax holding and celebrities like Virat Kohli & Anushka Sharma.
What led to the inception of Go Digit Insurance?
Though the insurance business has been in existence in India the concept of financial security is not completely realized by people, like an unsliced bread loaf. Customers fail to understand the right insurance product with adequate financial cover and affordable insurance premiums. To raise awareness about financial security and offer rights products for each customer and simplify the process of obtaining insurance and hassle-free claims, the business was started by Kamesh Goyal in 2017.
Digit’s founder-Chairman Kamesh Goyal is a veteran of the insurance industry with close to 33 years of work experience working with various reputed insurance companies like Bajaj Allianz and had played an instrumental role in setting up & developing the business. After initially working as a founding member, he served in many positions in the business and led Bajaj Allianz India for three years, thereafter he worked as regional CEO (Middle East, North Africa, and South Asia) for Allianz, then he moved to the headquarters of Allianz where he studied insurance markets of Munich and Singapore for close to five years. Having a deep knowledge & experience in the field, he observed that the insurance products were considered complex and the processes were complicated. This problem was coupled with a low insurance penetration of non-life products (0.77 percent in FY17) in India despite the availability of more than 25 insurance companies. This is where he saw an immense business opportunity to launch a business with an aim to eliminate complexities and to make the process more simple & convenient for the people.
Digit Insurance- Founder & the Team
Digit Insurance was founded by Mr. Kamesh Goyal in the year 2017, who completed his B.A.LLB and MBA from Delhi University. After which he began his career as a Manager at KPMG, India, and later joined Bajaj Allianz ( a joint venture between Germany’s Allianz and India’s financial conglomerate Bajaj Group business), where he served in various positions such as Chief Executive Officer, Chief Operating Officer, Head of Asset Management and Group Planning and Controlling, Regional Chief Executive Officer and Country Manager for about 7 years and he is regarded as the pioneer of financial services & insurance industry in India and holds close to 33 years of experience in the insurance business. Currently, he serves as the Founder & Chairman of the Digit insurance business. Apart from Mr. Goyal, the team consists of other insurance and e-commerce executives which includes more than 1000 employees in its corporation.
Some other team members include names such as-
i. Philip Varghese is presently serving as an executive Director of the Digit Insurance business. He started his career as a Project Manager at Bajaj Allianz after working for a brief period at Alpic Finance. Then, he worked for Bajaj Allianz for a brief period serving in important positions such as a Chief Executive Officer and Chief Operating Officer at Bajaj Allianz Life before finally joining Digit Insurance, in its early stages of development.
ii. Vijay Kumar is another important member of the team who is currently serving as the Principal Officer at Digit Insurance. He started his career as a Senior Executive Service & Quality at Kirloskar Pneumatic Company, he went on to work with many reputed companies in key leadership positions that include names such as Maruti Udyog Ltd, Hyundai Motor India Ltd., and Bajaj Allianz, before finally joining Digit.
iii. Similarly, Sriram Shankar is another Digit insurance executive who had active participation in the development of the Digit Insurance business. However, he quit Digit business in August 2018 and later went on to co-found Findeed.
Go Digit Insurance – Business & Revenue Model
Owing due to the long experience Mr. Kamesh Goyal had with the Bajaj Allianz, he decided to give the name ‘Oben’ (means at the top) to the start-up, but the team felt that the business name wasn’t simple enough for the common people to understand and relate to it. Thus, after much discussion & deliberation, the company decided to rename its as “Digit ” insurance due to its digitized approach and kept its tagline “Go Digit!”
Digit insurance works on a B2C business model with the only difference being that it aims to introduce a range of new products and services to revolutionize the insurance sector. It holds a general insurer license from the insurance regulatory authority of India that allows the company to offer a large variety of insurance products such as health insurance, car/bike insurance, home insurance, and even jewelry and mobile insurances as well through the digital platform of the start-up in cooperation with the strategic partnerships with various businesses and brands.
The business was started as a non-life insurance provider providing insurance products for automobiles, international travel insurance, home insurance, and mobile insurance. For improving its services and lowering its costs, it entered into strategic partnerships with businesses such as Tanishq, Clear Trip, and Amazon & Paytm Mall. Digit insurance was also one of the earliest businesses to introduce GoDigit Covid insurance which is a customized health insurance policy that helps to cover the hospitalization and treatment costs of the Covid-19 infected persons and a fixed cover along with the health insurance for its customers who have taken the policy. The platform has been established to simplify the complete process of registration to manage an insurance claim and redefine the insurance industry with its large digital presence.
As far as the business revenue model is concerned, Digit Insurance generates most of its revenues by selling its insurance plans & premiums, which includes a wide range of insurance products like health, motor, home & travel insurance and has achieved tremendous growth and success due to its online visibility and list of products. Further, data from the Insurance Regulatory and Development Authority of India (IRDAI) revealed that the company had a gross written premium amounting to Rs 460.03 crore in the first quarter of FY20, leading to more than 380% of year-on-year (YoY) business growth. It completed its $400 million targets in annual premiums in October 2021 and generated a total of $311.83 mn (Rs 2,324 crore) in FY21. Some of the top competitors of Digit insurance include-Acko, Coverfox, and PolicyBazaar, with Acko being one of the top competitors of Digit Insurance.
Digit Insurance- Business Marketing Strategy
Digit insurance has brilliant online visibility for attracting its customer attention and accordingly, it brags a customer base of more than two million headcounts, with a strong settlement success rate of 94% and Of the 94% of claims settled in the initial months after gaining IRDA approval, out of which, 92% were for car insurance, 91% for two-wheel vehicles, 99.5% for domestic travel, 97% for mobile phones, and 93% for international travel. Further, #SwitchToDigit is the first digital advertising campaign launched by Digit insurance in the year 2021 with star celebrity Virat Kohli for a 30-second ad during the IPL season. This campaign helped Digit Insurance to get a good marketing buzz and customer engagement considering the fan-following enjoyed by cricket as a sport.
USP in Go Digit Insurance Business
i. Go Digit insurance products are simplified & free of complexities so that a 15 years old could understand insurance product features and benefits involved.
ii. Lowest and affordable insurance premiums starting from as low as Rs.99 and Rs. 786 in case of two-wheeler insurance premiums for customers including 80% claim settlement in case of any damage or accident.
iii. Customers could get their best offers through online quotes by providing their basic details instantly.
iv. Quick, easy, and transparent claim settlement after claim registration online in a simple hassle-free manner.
v. Cashless Facility in case of car and health insurance policies quickly and easily through registered hospitals & garages registered with Digit insurance across any state in the country.
vi. In case of two-wheeler/three-wheeler accident/damages, Digit insurance offers a daily conveyance facility along with cab vouchers worth Rs. 200 up to three days after the date of registration of the claim, which is the first time being provided by any insurer in India.
vii. Offers automobile breakdown support in case of any breakdown due to any flat tire, flat battery, etc. through instant assistance with fixed time-period for extending assistance in any minor repair, towing facility, fuel assistance, conveying any urgent messages to your relatives, any medical assistance or even accommodation benefits.
viii. Go digit Travel insurance provides insurance coverage for flight delays starting from 75 minutes and above as compared to the traditional travel insurance companies that provide cover from six hours onwards. It also has a robust technology in place to auto-detect flight delays and sends intimation to policyholders to initiate their claims which could be initiated by submitting a copy of the flight’s boarding pass.
Digit-insurance – Awards & Achievements
Since its launch, Digit insurance has been recognized for its work in the insurance industry and has been recognized with several awards and accolades-
i. The Asia Insurance Review announced it as the ‘Best General insurance company of Asia”.
ii. Winner of the ‘CMO Confluence & Corporate Awards’ in 2019.
iii. The company ranked 5th among the LinkedIn Top Start-ups of 2018 and India’s top start-up on LinkedIn in 2019.
iv. Digit Insurance received the ‘Asia’s General Insurance Company ‘Award for the year 2019-2020.
v. Digit Insurance was received as the ‘General Insurance Company of the Year’ at the 24th Asia Insurance Industry Awards in the year 2020.
vi. Awarded as the ‘Insurance Start-up of the Year – India’ which was bestowed by Insurance Asia Awards 2020.
Digit insurance- Funding & Financials
To date, Digit insurance has raised a total sum of $530.8M in total eight rounds, and the latest funding was raised from came from Wellington Hadley Harbor and Ithan Creek Master Investors, where the company raised $70 mn on January 18, 2022, on a Venture – Series Unknown round. Fairfax Holdings owned by Mr. Prem Watsa is the biggest stakeholder in the company that holds 45% control in the business while the remaining stake is by the founder Kamesh Goyal (former Allianz executive). Prem Watsa is famous for his approach towards investments and is known as ‘the Warren Buffet of Canada’ similar to the American billionaire Warren Buffet. After raising an additional sum of Rs. 135 crores from its existing investors, it affirmed its unicorn status on Jan 15, 2021.
Since its unicorn status in 2021, there has been no looking back for the business growth. It raised a sum of $50 million in June 2019again from Fairfax Financial Holdings, and in January 2020, it raised a sum of $84 million from multiple investors mutually by TVS Capital Funds, Faering Capital, and others. In Feb 2020, Digit insurance received funding from Virat Kohli and actor Anushka Sharma in an external funding round with a sum of Rs. 2.5 Cores respectively. In July 2021, it raised $200 million from investors namely, Sequoia Capital India, IIFL Alternate Asset Managers, and existing investor Faering Capital among others in turn for an additional 38, 47,427 equity share at an issue price of Rs 314 per share (as per MCA fillings data) for a capital infusion of $442 million, which is considered as one of the biggest funding rounds in the history helping company to reach its current valuation at $3.5B. What was unique about this fundraising was that in addition to the three institutions investing in the company, 72 Digit employees also invested over $4.34 million as a part of this round.
Digit-insurance- Acquisition & Investments
In July 2018, Digit insurance acquired ITI Reinsurance Ltd. Jul 2, 2018, for a sum of $72.8 million.
Go Digit insurance- Growth & Milestones
Due to its USP and complete digitized features, the business started flourishing and expanding quickly. In early 2020, Digit had already achieved around $300 million (approximately Rs 2,130 crore) of annualized premium with more than 5 million customers and a 1.2 percent market share overall in the general insurance industry in India within two years since the launch of the business. Though, the COVID-19 pandemic brought a temporary halt along with economic stress in the Indian economy and many insurance businesses had to lower rates to ensure customer acquisition. But, Digit insurance was innovative enough to launch a Covid-specific insurance product that worked well for the business and even helped it gain traction with a growth rate of 44% despite the pandemic woes. It was the first-ever insurance product to be launched in India that provided cover more than 2 million people and contributed to 7-8% of the business revenue as of December 2020. The business further grew around 30% with an increased premium of $186 million (April’20 – Dec’20). Further, it was quick to or achieving success in diversifying its businesses along with operating businesses with low-costs while meeting its premium and policies target.
Further, the business had decided to have a public cloud-based IT setup from the word ”Go” with most of the applications and data being managed by a full-fledged IT team working for various business aspects such as insurance claims and registration managing everything (entire development, operations, and management), which in turn has reduced company’s dependency on other vendors & merchants, helping in the success of the business. The business automation (RPA technology) has been specially deployed (more than 150 bots) for business functions such as claims processing, quote generation, Policy issuance, customer service support, etc. through the Aria chatbot which has been useful for generating instant quotes. Therefore, the company intends to keep on investing in business automation (RPA and AI) to leverage improvement in all areas of business operations.
With all of this, Digit insurance has successfully achieved all its milestones in all these years, which include-
- It has successfully served more than 5 million customers through its online platform;
- It became one of the first start-ups to reach unicorn valuation within four years of launching its business operations in 2021.
- It observed an 11-times growth in the Digit group health business that was recorded at Rs 170 crores in total.
- Between March 20 and September 2021, the company sold 79,536 health policies providing a health cover to 42.5 lakh people leading to about 44 percent growth in the business with a total premium of Rs 3,243 crore (as of March 2021).
Go Digit- Challenges & Future Plans
Though Digit insurance is in a good position in terms of business growth and customer acquisition to date, like any other insurance business, it faces some major challenges. Let’s go further to find out the challenges and how Digit plans to rule them out-
i. Fraudulent claims- According to an estimate, fraud is one of the major challenges faced by the insurance industry, and each year the industry loses around 10 percent of the overall premium so collected to numerous cases of fraud. However, to tackle this problem, the Digit group is planning to employ artificial intelligence technologies for fraud detection. Also, there are AI and ML models created for recognizing irregularities in official papers, vehicle images, and customer parameters to apply contextual intelligence.
ii. Lack of Skilled human Resources-Digit insurance being a digitized platform for its services has its core use in the Public cloud on which the whole business thrives. Therefore, the business requires a talent pool with advanced skills in cloud computing and cloud security. Therefore, digit insurance intends to hire manpower having the desired skill-set from the top B-schools from tier-1, 2, and 3 cities in India. Simultaneously, the job requirements are also met through its large partner community on-demand basis.
iii. Maintaining Solvency- Though Digit insurance has seen a great deal of success in recent years, it has a lot to do in terms of business expansion. But as per the rules made by the insurance regulator of India on this behalf, every insurer must maintain 150 percent of solvency at all times of business which is roughly the number of assets per liabilities of the business. Thus, maintaining solvency and improving it at all times could be a problem sometimes, especially when the health insurance business is recording growth continuously while the vehicle insurance has slowed down in the pandemic when one insurance product is growing continuously while the other one has slowed down during the pandemic.
The ratio of the management expenses as a percentage of gross direct premium stood at 36.74 percent compared to 54.83 percent in the previous year. In the coming years, Digit insurance is planning to continue to grow at a similar speed and is looking ahead to expand its presence to Tier 2 & Tier 3 cities in India.
