Kamesh Goyal had spent more than 33 years in the insurance industry before launching Digit Insurance. The Bengaluru-based general insurance company, launched in 2017, came up with innovative digital products — a flight delay plan starting at 75 minutes; shop insurance; OPD health and mobile insurance, among others. After raising $200 million from Faering Capital, Sequoia Capital and IIFL Alternate Asset Managers in July, Digit Insurance is now valued at $3.5 billion. In FY21 when the Indian insurance industry grew just 5%, Digit grew at 44%, with a premium of $440 million. It has 20-million customers and has processed over 0.4-million claims. The company uses a hybrid model of artificial intelligence, analytics and human assessment.

The Idea!

It started around 2014, when I was with Allianz in Germany. Being in insurance for over 33 years, one thought one should get into it, and started with motor and fire insurance. As I started getting deeper into it, I felt there was a good opportunity. We do not just make new products, but also do traditional products differently with technology.

Early Struggle

One of the biggest challenges was getting the right people. Second was access to capital because insurance needs capital. In our case, we had an advantage because we started off with many colleagues with whom we had worked in the past. That made it a lot easier to start up than in a regular start-up. Overall, it has not been very difficult. One difficulty was that when distributors and clients see large entrenched players in the business, as a new player, you need to answer to everyone what you will do that others are not able to. We stopped hearing that almost 18 months after we started. Now everytime we come up with a new product now, people expect it to be different from the others.

Make Or Break Moment

When we launched Digit, we started the motor business with commercial vehicles. That was one of our early products and we had decent success. In travel the customer experience we saw with flight delay claims was very encouraging. In cars, a couple of corporates came in very, very early. In four months when we crossed ₹100 crore in premium, it looked promising. In the year we crossed ₹1,200 crore, we knew if we give good service and products, we will pull through.

The Business Model

It was difficult from a mindset perspective, but Digit is not about me, it is about a great team. We have a very senior team that spent days with retail brokers trying to figure out the pain points. That helped us design our processes and tech. Before launching any product, we would spend time on research — both primary and secondary — to understand what customers are complaining about. When we launched the flight delay plan, we bought two years of data on flight delays to understand how frequently it happened, and what sort of a cover we should give to customers.When we looked for mobile phone insurance, our team spent time in shops to understand how consumers buy and select mobile devices. Whenever we spend time on understanding the needs of consumers, adoption is relatively faster. Covid health insurance is another example, and we were the first company to launch, and it was timely, even during the strict lockdown. Insurance has been about big brands, but customers are ready to give a chance to new companies if they get value for money and good service.

Tech Challenge

In Covid, the first thing we did was work from home for everyone. We realised lockdown was imminent and many employees did not have good wifi and laptops. The first four weeks were challenging, but after that things have been pretty good. The only area where some of us struggled was when we were putting together a product virtually; it was the first time we were doing it in that manner.

HR Challenge

The advantage we have is that the core team has worked together earlier. We work with a few headhunters to identify people. We spend hours understanding their backgrounds. If we find it interesting, we give them an assignment. Then there would be detailed discussions.

Managing Investors

We have been very lucky with investors. A year and a half after launch, when we were looking for investors, we did not appoint any bank or advisor, as some people we were talking to came on board. There was a massive demand for investors in insurance. The fact that Digit’s growth rate had been significantly higher also helped.

Marketing & Sales Lessons

In the US and Europe, customers do a lot of online research and then go and buy offline. Then there are customers who will buy a product online, but for claims, go offline. We decided in the beginning that it is the customer’s choice. So whatever channel they want to buy from —brokers, agents, aggregators, institutional partners, e-commerce—we should have a presence across points. Our interactions with our distribution partners are 100% digital. We publish a transparency report every six months. Customers and distributors can compare us with any other company. We ourselves recognise where things have not gone well. In motor insurance, we started a video-based assessment, instead of a physical one. Almost 70-80% claims were getting settled this way.

Claim settlement is an integral part of the business. In travel, customers did not even have to call us, because we would know if the flight is delayed. In mobiles, we do online assessment and tell them what we can pay, or that they can get it repaired at service centres and not pay

When Did You Think You Had Arrived?

I would not say that we have arrived because insurance is a long-term business... But, we are on the right path.

Riding Through Toughest Times

It was in 2018. We wanted to put more products into the system. We had capacity challenges. The systems, and the entire architecture, were new. That was the only time when some of us were restless. There was massive demand in the market. At 10:30 a.m. in the morning the system started wobbling and did not pick up for the whole day. Only the next day by 7 a.m. we could identify what the issue was. That day everyone felt a bit low.

What Next?

Ever since Covid happened, growth in insurance has been very strong. We are optimistic about the future. But we also know that one big cyclone, one big pandemic could scuttle that. In finances, Digit has done significantly better than the industry. Almost 40% of our policies come from Tier-III towns. This percentage will only increase as we get deeper.

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