The insurance tech startup is set to raise $200 million from investors such as Faering, Sequoia
Digit wants to maintain solvency, with an equity dilution of 5% in the recent fundraise
Insurance technology startup Digit Insurance is raising $200 million from existing and new investors, founder and chairman Kamesh Goyal said. Existing investor Faering Capital, as well as new investors Sequoia Capital India and IIFL Alternate Asset Managers are participating in this fundraise, which is subject to approval from the Insurance Regulatory and Development Authority (Irdai).
Once the funding is completed, Digit’s valuation will almost double to $3.5 billion from $1.9 billion previously, Goyal said over phone. The company had raised $18.5 million from existing investors including Faering, A91 Partners, and TVS Capital in January.
The valuation makes Digit India’s third most valuable fintech, surpassing payments provider Razorpay and Pine Labs, which were valued at $3 billion each earlier this year.
The company is raising the funds to maintain solvency, with an equity dilution of 5% undertaken as a part of this fundraise, Goyal said. Digit has so far raised $442 million in equity funding.
The Fairfax-backed company provides insurance in motor, health, corporate, and travel categories. It was founded four years ago with insurance covers for electronic gadgets and mobile phones.
Motor insurance is Digit’s largest category, bringing 75% of gross premiums. Fire-related insurance (13%) and health covers (7%) together contribute 20%. With the impact of covid-19, the share of travel insurance fell below 0.5% last year from 2% previously.
The company clocked ₹3,243 crore in gross premiums in FY21, up 44% from the previous fiscal’s ₹2,252 crore.
“In the first quarter of this year, we grew by 60% (in terms of gross premiums) compared to the same period last year, and this is largely coming from the health insurance business. Further, we overall grew 70% in April and May versus the industry growth of 17%. For health, the growth is primarily driven by covid-related insurance products. Now, we will look to offer newer health cover products during this financial year as we look to expand our on-ground coverage to newer Indian geographies this year," said Goyal.
Digit said that over the past one year it has provided covid-related insurance to almost 3.6 million employees across 32,000 corporates.
Since its inception, the platform has provided insurance to more than 20 million customers and processed 400,000 claims.
Total policy renewal rates for the platform stand at 60% for private car insurance, 75% for its retail health insurance category, and 90% for insurance covers provided by corporates. Further, 20% of insurance covers sold on the platform are purchased by corporate clients for their employees.
“It was a difficult year for economies the world over but I am glad to see Digit continuing to stick to its mission of simplicity and growing ahead of the industry. Their relevant products, tech-enabled, simple processes, and customer-centric approach sets them apart," Prem Watsa, chairman of Fairfax Financial Holdings, the first investor in Digit Insurance said in a statement.
Digit is also backed by cricketer Virat Kohli, who also serves as its brand ambassador.
Currently, the firm has an offline distribution network of around 5,000 on-ground insurance agents and dealers.
The company aims to increase this number in the coming months. Almost 37% of its customers are in tier-2 and tier-3 towns.
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