BENGALURU : Insurance technology startup Digit Insurance is raising $ 200 million from existing and new investors, said founder and chairman Kamesh Goyal. The existing investor Faering Capital as well as the new investors Sequoia Capital India and IIFL Alternate Asset Managers are taking part in this fundraising campaign, which is subject to the approval of the insurance regulator (Irdai).
Once the funding is completed, Digit’s valuation will nearly double from a previous $ 1.9 billion to $ 3.5 billion, Goyal said on the phone. The company raised $ 18.5 million in January from existing investors including Faering, A91 Partners and TVS Capital.
The rating makes Digit India the third most valuable fintech, outperforming payment providers Razorpay and Pine Labs, which were valued at $ 3 billion each earlier this year.
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The company is raising the funds to maintain solvency with a 5% equity dilution as part of this fundraiser, Goyal said. Digit has raised $ 442 million in equity to date.
Backed by Fairfax, the company offers insurance in the automotive, health, corporate and travel categories. It was founded four years ago with insurance coverage for electronic devices and cell phones.
Motor insurance is Digit’s largest category and generates 75% of gross premiums. Fire insurance (13%) and health insurance (7%) together contribute 20%. Due to the effects of Covid-19, the share of travel insurance fell to below 0.5% last year from 2% previously.
The company has clocked ₹3,243 billion in gross written premiums in FY21, 44% more than in the previous fiscal year ₹2.252 million euros.
“In the first quarter of this year, we grew 60% (in gross premiums) compared to the same period last year, and that’s mainly coming from the health insurance business. Additionally, we grew 70% overall in April and May versus the industry’s 17% growth. In the health sector, growth is being driven primarily by Covid-related insurance products. Now we will try to offer newer health insurance products this fiscal year as we plan to expand our on-site coverage to newer Indian regions this year, “said Goyal.
Digit said it offered Covid-related insurance to nearly 3.6 million employees in 32,000 companies last year.
Since its inception, the platform has insured more than 20 million customers and processed 400,000 claims.
The overall contract renewal rates for the platform are 60% for private motor insurance, 75% for the private health insurance category, and 90% for corporate insurance coverage. In addition, 20% of the insurance coverage sold on the platform is bought by corporate customers for their employees.
“It has been a difficult year for economies around the world, but I am pleased that Digit continues to adhere to its mission of simplicity and stay ahead of the industry. They are characterized by their relevant products, technology-based, simple processes and their customer-centric approach, “said Prem Watsa, Chairman of Fairfax Financial Holdings, Digit Insurance’s first investor.
Digit is also supported by cricketer Virat Kohli, who also acts as a brand ambassador.
The company currently has an offline sales network of around 5,000 local insurance agents and dealers.
The company plans to increase this number in the coming months. Almost 37% of customers are in Tier 2 and Tier 3 cities.
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