- Insurtech startups like Acko and Digit are focusing on cutting expenses to secure profits.
- Both companies have switched their focus from motor insurance to health insurance, which is a more long-term product.
Insurtech startups, including Acko and Digit, have adjusted their strategies to cut down on expenses and improve profitability. After starting with motor insurance, which is mandatory for vehicle owners in India, both companies have shifted their focus to health insurance, which is a more long-term product. Digit, a Bengaluru-based insurance startup, reported a net profit of Rs 17 crore for the first half of the current fiscal year, compared to a loss of Rs 63 crore the previous year. Similarly, Acko, backed by General Atlantic, reduced its losses in the current fiscal year.
Digit, which is in the process of going public, has more than halved its advertising expenses and reported a rise in claims incurred. Acko, on the other hand, reported a net loss of Rs 34 crore in the first half of this fiscal year compared to a loss of Rs 272 crore a year back. Both companies have seen growth in their health insurance portfolios, with Digit almost doubling its health portfolio in the first half of the current fiscal.
Industry insiders believe that the high competition from traditional players necessitates a focus on less-penetrated areas with high growth potential, such as health insurance. According to a report by the SwissRe Institute, India’s insurance market is expected to expand at a rate of 7% between 2024 and 2028, with non-life business growing at a compound rate of 8.3%. With the right products and customer experience, Digit and Acko are well-positioned to take advantage of this growth.