Auto and health insurer Acko’s next big bet is a $370-billion industry

Acko, a digital insurer backed by Multiples PE and General Atlantic, expects its healthcare services segment to outperform its auto business, indicating an interesting strategy for a firm that has been synonymous with auto insurance for the past eight years.

The Bengaluru-based firm expanded its healthcare services playbook with the acquisition of OneCare—a health-tech firm focused on chronic care delivery—last month, aiming to create a comprehensive healthcare ecosystem.

“We launched our retail health insurance product nearly 18 months ago. We want to go beyond insurance products because our customers trust us. The acquisition will help us tap into the entire healthcare ecosystem of a user," Animesh Das, chief executive of Acko’s general insurance business, told Mint.

The segment is expected to make up 30-40% of Acko’s overall business over the next few years, Das added.

Founded in 2021, OneCare provides lifestyle care for patients with chronic diseases, with personalised care plans, a smartphone application to track health goals, and connected technology tools like continuous glucose monitors.

Acko now plans to tie up with various healthcare providers such as diagnostic labs and hospitals to give users access to a range of services along with insurance claims. According to Das, the idea is to make use of OneCare’s omnichannel healthcare delivery system to cover services from prevention to care and recovery.

“There is huge potential in the industry. I don’t think the industry has been tapped enough," Das said.

Acko has secured nearly $450 million in funding from investors including Accel, Elevation Capital, and General Atlantic. It was last valued at $1.1 billion in October 2021.

Its entry into the healthcare sector puts it in direct competition with players such as PharmEasy, HealthQuad-backed HealthifyMe, and HealthPlix that provide healthcare services such as diagnostic tests and doctor consultations.

Billion-dollar industry

India’s healthcare sector is valued upwards of $372 billion, and is growing at a compound annual growth rate of 21% since 2014, according to estimates by Niti Aayog, the government’s think tank.

“Healthcare in India is booming. It’s no surprise that insurance players want to bank on the opportunity, especially given that insurance can be tough to scale," said an early-stage investor tracking the fintech ecosystem, asking not to be named.

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Acko’s revenue from operations grew 32% to ₹1,759 crore in 2022-23, but its losses surged to ₹738 crore weighed by rising expenses.

Health insurance already constitutes nearly half of Acko’s premiums, with corporate health accounts accounting for nearly 44%. Auto insurance premiums accounted for about 43% of its premiums, as of January.

In May last year, Acko acquired Parentlane, a digital health platform focused on maternity and child health, to expand its healthcare delivery services.

“Health insurance tends to be a long-term product, as opposed to vehicle insurance which is mandatory for vehicle owners in India. Coupling it with services seems like a natural extension to grow the vertical," said the investor quoted above.

Acko isn’t alone. Rival insur-tech firm Go Digit, which listed on the bourses in May 2023, also shifted gears towards health insurance over the years. It nearly doubled its health premiums in the first half of 2023-24.

Acko began in 2016 by selling vehicle insurance with a no-intermediary approach. With a market share in single digits, Acko has been looking at several diversification options.

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Recently, Acko entered the car servicing and repair space with Acko Drive Repair Centre, seeking to capitalise on the growing demand for branded car repair and maintenance services.

Servicing in-use vehicles presents a viable opportunity for tech-based firms as the sector remains largely fragmented and unorganised, according to the company.

“We are working on evolving our healthcare thesis. We will customise user experience based on feedback and evaluate best measures to scale," Das noted.

Acko expects its general insurance business, including health insurance, to be fully profitable by 2026-27, Varun Dua, co-founder and chief executive of Acko Technologies, the parent company of Acko General Insurance, had told UBS in January.

India’s insurance sector is expected to grow fast between 2024 and 2028 with premiums rising at an average rate of 7.1%, driven by an expanding economy, growing middle class, and regulatory support, according to a report by Swiss Re Institute.

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