With the pandemic affecting demand for motor insurance, Go Digit focussed on the health segment, offering a range of products. Vijay Kumar, CEO, tells Salman SH the move allowed the company to register 44% y-o-y growth in gross written premiums in FY21. Excerpts:
From starting off in just a handful of insurance verticals to being a full-stack retail insurance player that is currently valued at over $3 billion, what explains your astonishing growth in just 4.5 years of existence?
At the time of our inception, only a handful of insurers had recognised tech as a key business driver. We started Digit in 2017 with the intention of transforming the insurance landscape by tweaking the way traditional products like motor and fire insurance were designed and sold. We were able to achieve this by leveraging technology, right from onboarding a customer to settling claims to renewing policies. We ensured that our objective of transparency and simplicity was embedded in all our processes. The idea was to identify customer pain points before launching any new offering. For instance, for our flight delay cover, we evaluated two years of flight data to design an offering that truly favoured customers. Another example is our Covid health product. One of our employees recognised that there could be huge demand for Covid-specific cover, and this helped us come up with India’s first Covid product in March 2020 under the Sandbox Regulation. This was even before Covid-19 was declared a pandemic.
Most high-growth tech start-ups see funding events as a big milestone, and to many, private VC/PE capital is the only channel of capital to expand/grow their businesses. How has Digit approached fundraising?
We were fortunate to have Fairfax back us from the very beginning and this was possible due to the association that our founder had with Prem Watsa, the founder and CEO of Fairfax. The Toronto-based company has many investments in India and, therefore, has a good understanding of the industry. We have not appointed an investment banker for any of our fundraising rounds. All our other investors came by through connections in the industry, friends, and, in a few cases, additional efforts from our end. In every round, our own employees have invested in the company. When it comes to fundraising, we have been growing at a healthy rate as a company and have a nationwide presence. This helped us turn profitable (on IFRS basis) within four years of operations.
The years 2020 and 2021 were tough for tech start-ups with many of them having to resort to massive pay/job cuts to weather the pandemic. How did you manage to stay afloat during the pandemic?
The pandemic hit demand for motor insurance and led to rising health insurance claims, which impacted loss ratios across the industry. Demand for motor insurance went down due to the state of the economy as well as a shortage of semiconductor chips. So, we pivoted to health as a category and focussed on enhancing our offerings under this segment. Our Covid-specific health product was a huge success. We grew by 44% in FY21, notching a premium of Rs 3,243 crore, while the overall industry growth stood at about 5% last year. In the first half of FY22, we recorded gross written premium of Rs 2,196 crores,as against Rs 1,312 crore in the first two-quarters of FY21, which was growth of 67%.
Insurance is a tough business, especially when it comes to meeting regulatory requirements/compliance standards. Could you elaborate on how you navigated these challenges, especially in the regulatory space, yet managing to add multiple product lines in a short period of time?
At Digit, we identified quite early on that our customers are looking for simplified processes and we knew that leveraging tech was the only way to ensure that. Through the Sandbox initiative, the regulator has encouraged insurers to use technology to innovate and develop products/features. We have been extremely transparent when it comes to our products and processes.
Could you explain how Go Digit implements new technologies/methods that simplify purchase of products and settlement of claims?
Technology is the backbone of Digit since its inception in 2017. The use of Big Data for business intelligence and data analytics has helped us close the gap between data, insights, and actionable solutions. We have built ‘smartphone-enabled inspections’ for instant motor insurance pre-inspection using AI and ML. This has eliminated the need for physical inspection and made the process efficient. We also have a system that helps us detect frauds by using image analytics, AI, and ML. Our integrated API solution on cloud helps trigger automatic claim notifications for travel insurance customers if their flight is delayed beyond 90 minutes. The reception to tech-integrated solutions has been phenomenal and has helped Digit gain a firm footing in the industry in a span of just over four years.
