Digit Insurance May Raise Up To $100 Mn At A Valuation Of Nearly $900 Mn

Bengaluru-based insurtech startup, Digit Insurance, is said to be in talks to raise a fresh funding round of up to $80 Mn-$100 Mn. The investors in the round may include TVS Capital Funds, A91 Partners and Faering Capital, which are said to be in advanced talks with the company.

A TOI report citing sources said that the transaction is waiting for regulatory approval and it is almost finalised. It further said that this round may value the company at around $800 Mn-$900 Mn, putting it close to the unicorn club.

The report further added that the company’s senior and top mid-management are also putting in around $4 Mn-$6 Mn. Prior to this round, Digit has received total funding of $95 Mn from Fairfax Holdings.

Founded in 2016 by Kamesh Goyal, Digit Insurance is a tech-driven general insurance company building a technology platform that can offer customised insurance products at reduced costs and provide efficient customer service as well. Digit claims to have added more than 5 Mn customers and having closed 1 Lakh claims.

The company also claims to have a combined ratio of 113% and a revenue of $173 Mn. The company has launched products across three categories — motor, travel, and personal accessories.

Earlier, Goyal has reportedly said that the company is already cash-flow positive. “We are targeting break-even from an accounting perspective (international accounting standards) by March 2021. The exact time period will depend on the FY20 results and the loss ratio trend,” he added.

The overall insurance industry is expected to reach $280 Bn by 2020. But digital insurance has a penetration of less than 4% in the country. However, the penetration is growing at about 90% annually. Analysts are of the belief that the insurance market is big enough to absorb a lot of players. Yet the high customer acquisition costs and heavy regulations are a plague to the growth of digital insurance players amid the traditional players like LIC and GIC.

Sustainable and regular revenue flow is extremely vital to sustain long-term in the digital insurance sector. Here, Digit Insurance competes with the likes of Coverfox, Acko etc as it tries to gain a larger market share in the competitive landscape.