Digit Insurance: 6x Profit Growth!

Hey there,

With approximately ₹5,500 crores in revenue, Digit Insurance saw profits grow 6 times over the previous year, BEATING its loss-making competitors like Acko, PolicyBazaar, and InsuranceDekho.

But what's the secret behind Digit's success?

Some quick context: Digit Insurance was founded in 2017 by Kamesh Goyal, after working for over 2 decades in the insurance sector. This extensive experience gave Goyal unshakable confidence to disrupt the industry he had dedicated half his life to.

The company got early funding from Canadian billionaire Prem Watsa providing the capital required to get started. Since then, Digit has raised over $500M to date and has reached a valuation of over $4B.

But how exactly is Digit able to outperform established legacy players and fast-growing insurtech startups alike?

1/ Becoming the insurer of choice for younger Indians:

India’s working-age population is expected to reach 68.9% of the total population by 2030, with a median age of 28.4 years. Companies that can appeal to this massive demographic will not just win - they will leave competitors in the dust. And, Digit understood this early on.

To better appeal to this market, Digit has onboarded Virat Kohli as its brand ambassador. The company has also invested heavily in content teams to ensure all its policy documents and clauses are written in simple English. 

2/ Leveraging third-party distributors for exponential growth:

Digit has taken a different approach from its new-age peers when it comes to distribution channels. Most insurtech companies want to reach customers directly, cutting out middlemen and offering improved pricing.

Digit has embraced having partners across the spectrum - including agents, corporate partners, and insurance brokers. Since starting up, Digit has sold more than 18 million policies through its partner network, accounting for over 80% of the company's overall policies sold.

3/ Going beyond just Tier 1 cities:

Thanks to its third-party distributors, Digit has successfully penetrated Tier-2, 3, and even Tier-4 cities in India. And, now, 10% of its business comes from mostly rural areas. 

The founder proudly states, "We have either sold a policy or processed one in 99.56 percent of all postal codes in India." Additionally, offering services in native languages has further enhanced customer satisfaction and sales.

These strategies, combined with the founder's extensive experience, have propelled Digit's rapid growth, making it a top player in the insurtech space.

The question now is whether Digit ever be able to compete with giants like SBI Life, HDFC Ergo, or ICICI Lombard, which operate on a scale at least ten times larger than these new-age startups.

✏️ Jargon of the day

Demographic Dividend:

The demographic dividend is when a country has a high number of working-age people compared to those who are not working, usually because of fewer children and the elderly.

This situation can help the country's economy grow faster, as more people can work and contribute. However, the country needs to provide good education and job opportunities to truly benefit from this advantage.

Loved this edition? Or have some thoughts to share? We'd love to hear from you

Cheers,
Karthik