With Rs 350 crore in the bank, will Fairfax-backed Digit Insurance give the likes of Coverfox and Acko, a run for their money?

Kamesh Goyal’s association with Prem Watsa, the founder of Fairfax Financial Holdings, goes back to 2007. The chairman and founder of Digit Insurance was introduced to the Canadian investor by Ajit Jain, Vice Chairman of Insurance Operations for Berkshire Hathaway.

For those who don’t know, billionaire Prem Watsa is popularly known as the ‘Canadian Warren Buffet’. Kamesh and Prem interacted often over the years, when the former thought of starting up, he spoke to Prem. “It was natural for me to choose and work with Prem and Fairfax,” says Kamesh.

The team at Digit Insurance

Kamesh incorporated Digit Insurance in 2016, but the company got licenses for its planned products and started operations only in November 2017. Sensing an opportunity, the Fairfax Group picked up 45 percent stake in the digital insurance entity for Rs 350 crore in what was one of the largest rounds for startups in the digital insurance space.

Why insurance?

To this, Kamesh replies,

“The insurance industry has seen lots of changes in the last 15 years in India. Unlike other sectors, we have not seen insurance companies redefining the customer experience.  Further, only 29 percent of insurance customers are satisfied with their current providers, and we hope to change that.”

He adds that Digit plans to simplify insurance products so that even a 15-year-old can comprehend them.

Being a general insurance company, Digit offers insurance for cars, mobile handsets, travel, and jewellery. By digitising the process, the company plans to solve for lack of understanding of right insurance products while easing the long, tedious claim settlement process.

Principles to development

“Our mission is to ‘Make Insurance Simple’. Insurance comes with a lot of challenges such as extensive paperwork, hidden terms and conditions, elaborate claims process and many more. Our approach at Digit to build the concept of ‘Simpler Insurance’,” adds Kamesh.

While building its insurance products, Digit Insurance took the following approaches.

Product Principles

Ensuring that the company was building the most relevant products to address a customer’s needs, the platform also sought to make all processes, from onboarding to claims, seamless and frictionless.

Building the right team

Kamesh says,

“To break away from the usual, one needs to create a team with the right mix of people including people who can bring the power of experience and knowledge from that field, and people who can bring in fresh perspectives and can challenge the norms.”

The company made sure it hired employees not only from the insurance, but from non-insurance backgrounds such as ecommerce, consulting, and technology, among others. In fact, around 53 percent of Digit’s team is from the non-insurance background.

The company, from the very beginning, made sure to invest in technology.

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

The offerings

The company offers insurance across categories.

Digit distributes its motor insurance policies through 350 strategic partners across the country, including agents and brokers. These also include web aggregators like Policy Bazaar and Digit’s own website. According to the company, 80 percent of its motor insurance claims have been approved within 24 hours of customers or workshops providing details of a damaged car. Further, 95 percent of the claims are done through video, or by remote video inspection.

The insurance provider has tied up with channels such as Paytm and Amazon to offer mobile handset insurance which can be bought at the time of purchasing a new smartphone online. The company also claims that 93 percent of the claims under this product have been approved within 24 hours of a customer’s self-inspection of his or her smartphone.

In all, 73 percent of mobile phone claims are approved by Digit through video or its self-diagnostics app.  According to the company’s website, the insurance also covers theft. Further, the insurance policies are product-based and not attached to a single person.

Travel insurance policies offered by Digit cover domestic travel, and are offered on travel ticketing platforms like ClearTrip, and come with a fully digital claim process. On a flight delay exceeding 75 minutes, a claim notification is immediately sent to a customer.

Currently, Digit Insurance offers jewellery insurance only at Tanishq stores in Bengaluru and has a worldwide cover against theft and accidental damage, which includes breaking.

The insurance provider claims that while travel insurance makes up 56 percent of its portfolio, close to 38 percent is motor insurance and 6 percent of the portfolio. The company claims to have crossed the 1.5 lakh-customer mark within four months of its launch, and added it clocked Rs 100 crore in premium from December to March.

In coming months, the company plans to launch categories such as two-wheeler, international travel, health, and home insurance.

“Post that, we will evaluate gaps which are from a customer stand point and we will try to come out with products addressing those gaps,” adds Kamesh.

Speaking about metrics, Kamesh explains,

“We’ve taken settlement of claims as our core business goal, instead of the number of policies sold or gross premium written. Our first goal is to service 50,000 claims, and give the customers a seamless experience. We believe that will be a big growth driver for us in the next financial year. We are also conscious that we need to continuously improve our services.”

Heavily funded pockets

Just last year, Acko General Insurance had raised $30 million, in what was touted to be one of the largest seed rounds for the Indian startup ecosystem. The funds were raised from HNIs and venture capital firms Accel and SAIF Partners. Last month, Coverfox raised $22 million as part of its Series C funding, led by IFC, a sister organisation of the World Bank Group, as well as Transamerica and other existing investors.

With competition in the insurance space seeing heavy funding, Digit’s Kamesh says he has the edge of having an experienced investor backing him, and of course, capital in the bank.

Competition in the sector, in fact, just got fiercer as Paytm, one of the largest payment companies in India, announced its entry in the insurance space, and set up Paytm Life Insurance Corporation Ltd and Paytm General Insurance Corporation Ltd in February this year. Ola also forayed in the travel insurance sector last month and insures cancelled flights and loss of baggage.

What now remains to be seen is how innovation in the sector will drive volumes and also explore untapped customer segments.

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