A young Indian startup that is competing against the country’s obsolete insurance industry with a digital-first product – and that has already been supported by the global giant Amazon – today announced a new round of funding.
Bangalore-based Acko announced Tuesday that it had raised $ 60 million in its Series D funding round. Germany-based Munich Re, one of the world’s largest reinsurers, led the financing round, in which the existing investors Amazon, RPS Ventures and Intact Ventures, the corporate venture arm of Canada’s largest property and casualty insurer, also took part.
The new round, which brings Acko̵
Acko develops and sells bite-sized auto insurance products (for drivers and others in traffic-related scenarios). The startup expanded its catalog six months ago to include health protection, which it sells to companies and employers. More than 150,000 employees are already covered by Acko’s health protection, announced the startup.
Acko founder and CEO Varun Dua told TechCrunch in an interview that the startup has amassed over 60 million customers and has issued over 650 million guidelines to date.
Offering a large catalog of bite-sized insurance policies is vital for businesses in India. Only a fraction of the country’s 1.3 billion people currently have access to insurance, and most cannot afford large policies.
According to the rating agency ICRA, insurance products reached less than 3% of the population in 2017. The average Indian earns around $ 2,100 a year, according to the World Bank. ICRA estimated that Indians who bought an insurance product spent less than $ 50 on it in 2017.
“We are delighted to be working with one of India’s leading digital insurers and other investment partners to support Varun and his impressive team on their future journey,” said Oshri Kaplan, Director at Munich Re Ventures. in a statement.
“As Munich Re Ventures’ first investment in India, we look forward to the positive impact digital native insurance solutions will have on the country, with Acko leading the way.”
Acko sells insurance policies directly to customers or through partners like Amazon, who entered the insurance space in the country earlier this year in partnership with Acko. (Amazon currently accounts for only a fraction of the insurance Acko sells, according to those familiar with the matter.)
Acko’s products have quickly gained popularity in India for three reasons. It doesn’t rely on middlemen who have been shown to slow down innovation for the entire insurance industry, Dua said. By engaging directly with customers, Acko can offer more competitive and customized policies, he said.
The second is Acko’s underwriting technology, which looks through a series of data points to assess if someone is eligible for a policy, he said.
Acko has also made it easier for people to access and then claim policies. Since everything is digital, signing up doesn’t require paperwork and filing a claim is also quick – factors that keep existing customers happy, Dua said.
Numerous startups and established banks in India have launched products to help win this market. Paytm (India’s Most Valuable Startup) and its co-founder and CEO Vijay Shekhar Sharma announced in July that they would be acquiring insurance company Raheja QBE for $ 76 million.
Dua, who has spent more than a decade in the insurance business, said he wasn’t worried about competition because the market was big enough.
The startup plans to use the fresh capital to scale its technology and data teams by at least 30% to 40%, Dua said. There are also plans to use some of the capital to invest in branding to reach more customers, especially those who live in smaller cities in India.
The rest of the money is used to finance the insurance policies. Unlike several fintech startups in India that work with banking partners to fund loans, insurance companies have to take risks themselves under current regulations.
“We would like to be in a position where we always have a strong record,” said Dua.