Can digital insurers replicate ZhongAn’s success in India?

In the Indian insurance sector, Kamesh Goyal has the image of a founder who does not sell frills or hype or big promises. By selling over 20,000 policies since the launch of Digit Insurance late last November, he has lived up to this image.

Digit is one of only two online-first insurance companies in India that have the license to sell insurance policies. It is also the first one to enter the previously unchartered territory of selling innovative insurance products in India.

Speedy Redressal Mechanism

Consider this: Digit partnered with the online travel company Cleartrip a month ago to test the market for its travel insurance policy. A conventional domestic air travel policy covers rare events like flight delays of six hours and requires the traveler to file a claim that is processed in about a month.

Digit’s policy offers claims for more than 75-minute-long delays and has a speedy redressal mechanism that ensures swift settlements. The company automatically detects flight delays, sending an SMS prompting affected policyholders to make their claim. After this, a picture of one’s boarding pass is the extent of the paperwork required. Who wouldn’t want this hassle-free insurance experience?

The product met Digit’s two objectives—it brought more value to customers and it solved a core problem for its partner. This is why Cleartrip has decided to end its partnership with ICICI Lombard General Insurance in favor of a partnership with Digit. It may be beginner’s luck, but, perhaps, it is the smell of potential success that is waiting to be realized in Indian insurtech.

The Insurance Regulatory and Development Authority of India (IRDA) assessed domestic travel insurance at a premium of Rs 24.6 crore ($3.8 million) in FY 2016-17. A former CEO of Bajaj Allianz General Insurance, Goyal believes that if a new insurance product creates more value for the customer, not only is the entire travel insurance sector a potential market, but an added value can also grow the market. Digit is testing this philosophy by partnering with the online marketplace Paytm and jewelry brand Tanishq to ensure mobile phones and jewelry, respectively. This, against damage and theft. Digit is gearing to launch motor insurance next week and health insurance in April.

Transactions for flight tickets, cell phones, or jewelry do not have much in common, except that each one of these transactions creates a potential market for new kind of insurance policies. Insurtech investors including SAIF Partners, Accel India, and Fairfax, who have invested Rs 191 crore ($30million) and Rs 385 crore ($60.2 million) in Digit, respectively, believe that the sky is the limit. Their belief is based on evidence and has a name—ZhongAn Online Property and Casualty Insurance.

Policies on the flight delays

The Indian insurance sector in general (and newcomers like Acko and Digit in particular) is enamored by its success. Last year, Apollo Munich Health Insurance-backed Toffee Insurance, financial services company Edelweiss, and Paytm Bank joined the bandwagon by securing licenses to introduce newfangled insurance policies in India.

Goyal, like others, is inspired by Shanghai-based ZhongAn, which also sells insurance policies on flight delays. The former has also learned the digital-only insurance lessons from the latter—never say no to a customer, and fit in policies with low premiums. Insurtech startups across the world—such as US-based Lemonade, MetroMile, and Oscar—are also espousing the same lessons in renters, auto and health insurance.

ZhongAn is the most successful among them all. In India though, Goyal is cautious that Digit does not attempt to replicate ZhongAn in India; Acko appears to be trying to chase its Chinese counterpart’s unique strategy. What does ZhongAn have that no one else does? Exclusive access to hundreds of millions of consumers. This enabled the sale of an unprecedented number of policies in a short span of three years. The access was granted by e-commerce providers, including Alibaba. Is such an alliance possible in India? More importantly, is ZhongAn even worth replicating?


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