Merging Their Core Competencies with Binny Bansal's Expertise, This Startup Aims to Transform How India Buys Insurance
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The insurance industry in India is on the verge of a complete makeover. With digital service providers taking over the market, traditional companies are mending their ways to meet the demands of every day advancing customers. The digital disruption has further fuelled the need for online go-to-marketplaces for customized products and real-time pricing.
Among the many start-ups leveraging the opportunity, one name which has caught the eye of Flipkart co-founder, Binny Bansal – often touted as the poster boy of India’s startup ecosystem, is Acko General Insurance. The online insurer recently raised $65 million in Series C round of funding led by Bansal, RPS Ventures, Kabir Misra, an ex-managing partner at Softbank and Intact Ventures Inc.
In a space which has witnessed little innovation in the past 30 years, Acko aims to address the insurance needs across multiple touch-points in the daily lives of the “digitally-savvy”. The startup has distributed insurance policies to over 20 million unique customers through their direct-to-consumer approach since being incepted in 2016.
In an exclusive email interaction with Entrepreneur India, the MD and CEO of Acko, Varun Dua unveils the company’s strategy to make innovative insurance products accessible and conveniently positioned for all customers:
Catching Binny Bansal’s Eye
Acko’s recent funding round was testimony that in India, not the timeline but innovation matters. Binny Bansal sure has an eye for potential. His past investments in start-ups like Unacademy, Curefit, Stellapps, and SigTuple have proved the same and now, Acko has joined the list too. His experience in scaling a technology-first company will prove extremely helpful in the next leg of our journey, Dua expressed.
Commenting on the investment, Binny Bansal said in the statement, "Technology-led insurance is expected to play a significant role in the growth of the underpenetrated insurance sector in India." He further added, “Acko is the pioneer of digital-native insurance and I am delighted to partner in its exciting growth journey.”
“He has seen the large scale in his previous experience and hence, collaboration with Acko at this stage will bring together their core competencies, ultimately enhancing the customer experience,” Dua stated. He further boasted, “We are excited to put the company on a rapid growth trajectory with this round of funding.”
With this latest round of Series C funding, Acko’s total funds raised stands at $107 million. Avendus Capital was the advisor to Acko on this fundraising. Previously, Acko raised $30 million in seed funding, one of the largest seed rounds for the Indian start-up ecosystem and later, raised Series B funding of $12 million led by Amazon.
Insurance is a capital-intensive business and insurers are required to maintain adequate capital to take on more risk and hence, “the fresh funds will be used towards maintaining solvency capital. Besides this, the funds will also be used towards brand building and on digital technology by adding more manpower in the technology front,” Dua expressed.
While right now Acko offers auto, travel, accident, gadgets and appliances insurance, they want to soon expand their product line by launching health insurance and products across credit protection, among others.
Offline to Online Transition
Indian general insurance is a huge under-served market that is ripe for disruption. General insurers today face structural challenges such as information asymmetry, intermediary dependent distribution, branch-led geographic expansion and physically-intensive operations. That’s where Acko’s differentiated go-to-market advances over the traditional models.
The conventional insurance companies are lacking to meet the demand of tech-savvy consumers today. Dua pointed, “The traditional insurance companies have processes and systems that were largely designed for the offline world. Such processes are neither able to deliver high-frequency products nor meet the expected experience of today’s digital customers.”
With the advent of technology, analysing customer data to create customized products and better pricing for different customer segments have become easier. Thanks to the platform’s seamless and convenient operative manner, “Today, a customer can visit Acko online and purchase an auto insurance policy in just 2 minutes and get a host of benefits.”
What Went Right
Having 10 years of experience and the required knowledge of the insurance space before launching Acko worked for Dua. “Acko executes primarily through a digital platform with innovative products and smart technology offerings, which differentiates it from the market,” he emphasized, answering what makes them unique.
The company uses a direct-to-consumer approach for distributing traditional products, allowing for favourable risk selection and superior underwriting. Acko also offers innovative and bite-sized insurance products such as rider insurance, mobile and appliance protection, ticket cancellation etc in partnership with 15+ leading players in the internet ecosystem such as Ola, Amazon, redBus, Zomato and UrbanClap.
Currently, Acko’s two key focus areas are auto insurance and bite-sized innovative products through digital partners. “Auto insurance is about 40% of the overall general insurance market. From a scale perspective, it’s a large opportunity and with the right delivery model and the proposition, Acko can serve a large customer base better,” Dua stated.