India’s InsuranceDekho raises $150 million despite market slumpReading Time: 3 minutes
The Indian insurance platform InsuranceDekho has raised $150 million in a Series A funding round as the firm eyes merger and acquisition opportunities at a time when the market slump has engulfed most startups in the South Asian nation.
Goldman Sachs Asset Management and TVS Capital co-led the 7-year-old startup’s Series A funding round, they said. The round includes some debt — about $40 million — but its executives said that more than a half of the raise was against equity.
InsuranceDekho works most insurance providers in the country and has direct integration with nearly four-dozen firms through which it offers nearly 400 insurance products. The coverage on automobiles is currently the most popular insurance product that the startup sells, it said, as it gears up to expand into health and life categories as well as serving the small and medium sized enterprises.
India’s current insurance penetration remains below 5% of the GDP, compared to 12% in the U.S. An average Indian makes about $2,100 in a year, according to World Bank. The rating agency ICRA estimated that of those Indians who had purchased an insurance product, they were spending less than $50 on it in 2017.
Ankit Agrawal, co-founder and chief executive of InsuranceDekho, said the startup has established presence in about 98% of all zip codes in the nation, giving it an opportunity to go deeper as the market matures. Even as InsuranceDekho is not a household name in urban Indian cities, Agrawal said the startup is selling more than 80% of all its coverage in smaller Indian cities. InsuranceDekho is aiming to disburse total premiums worth over $240 million by March, he said.
‘We need to go beyond the urban regions when it comes to insurance penetration in the country. To realize our goal of democratizing insurance for the general public, we are expanding our reach and will continue to build on our tech-based solutions and empowered advisors so that they can serve every village and region of India by the end of the year,’ said Agrawal.
InsuranceDekho currently relies on over 80,000 gig-economy workers, called ‘agents’ to educate the market and sell insurance coverages. Agrawal defended that the larger India is currently not ready to download an app and buy an insurance product. They need awareness of its benefits and someone to whom they can ask questions, he said. The startup plans to more than double the workforce of agents, who are not its employees, by the end of the year.
Scores of firms including Digit, which is looking to go public, listed firm PolicyBazaar, and Amazon-backed Acko, which is in advanced stages of deliberations to raise a round, as well as Paytm and PhonePe sell insurance products in India. The arrival of fintech giants in the category, Agrawal argued, is indicative of the market size and opportunity.
The key to increasing the adoption of insurance products in India is access to the middle and lower middle income class, said Praveen Sridharan, a Partner at TVS Capital, in a statement.
‘InsuranceDekho, with its agency model and digital DNA, offers a powerful mechanism for this penetration to expand. We are convinced on the InsuranceDekho model. Of course, we always back founders who can demonstrate bringing alpha and were impressed with Ankit and the team basis their execution capability, operational excellence, and superior technology skills. We are delighted to partner in their journey of enabling access to insurance products to the 600,000 villages of India,’ he added.
InsuranceDekho also plans to deploy the fresh funds to acquire smaller firms that could increase its capabilities or give it a wider geographical advantage, InsuranceDekho’s Agrawal said.
The startup’s funding comes at a time when many other firms in the country are struggling to put together new financing as investors grow cautious of the market conditions.
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