Two decades ago when private insurance companies made their entry into India's then under-penetrated insurance sector, there were many apprehensions as state-owned companies like Life Insurance Corporation of India (LIC), New India Assurance, Oriental Insurance and others ruled for decades. They were all big companies, backed by the government and were trusted brands in the market. "Who will trust private insurance players?" people would ask.
Today, things are different. ICICI Pru, ICICI Lombard, HDFC Standard Life, HDFC Ergo, Max, Max Bupa and Apollo Munich are big names in life, general and health insurance. However, they cannot rest on their laurels as the insurance industry is facing yet another disruption, from fully-digital insurers.
Mumbai-based Acko General Insurance, founded by Varun Dua, is running a totally digital platform based on risk-based pricing for retail covers such as motor and health. "As the sector evolves, you will find more niche companies coming up in terms of product and business models," says Dua who earlier co-founded insurance broker Coverfox. He switched to manufacturing insurance than becoming a mere broker because of the huge potential in the digital space. In the US, for instance, there are many fully digital insurance players doing underwriting, two big names being Lemonade and Root Car.
India is no exception as there are over 63 million digitally native millennials driving the Indian economy. Be it e-commerce retail, food or hiring a taxi, digitally savvy customers are creating a large industry for players who are willing to offer a transparent platform.
What brings confidence to the platform is the presence of investors such as Amazon, Narayana Murthy's Catamaran Ventures, DSP's Hemendra Kothari, and a few others who have invested in the capital.
This young company plans to make general insurance (car and health) transparent and simple for consumers and minimise their dependency on others for advice. Consumers will be able to access low prices in one click, based on their risk profile and also get claims in the fastest possible time.
Dua believes that the low general insurance penetration, at 0.8 per cent of GDP, is actually constrained by the complexity of products, cumbersome paper-based offline process, varied pricing, lack of innovation and ambiguous terms and conditions. "Acko is addressing each of these in every product being introduced in the market," says Dua. Acko has innovated products like insuring Ola rides for accidents or gadget protection through Amazon.
However, existing private insurance companies are changing and may catch up soon with digital players like Acko. Dua counters saying that not everyone (physical players) can replicate the success of Flipkart or Amazon. "Our DNA is digital. We are doing only digital. We are not a broker driven organisation," asserts Dua.