Mumbai-based Acko General Insurance, which was set up by Coverfox founder Varun Dua, has raised $30 million in its seed funding round. This is the first major funding round for a startup in the insurance tech space.
Investors who participated in this round include high-profile backers like Narayana Murthy and Kris Gopalakrishnan of Infosys, DSP Blackrock’s Hemendra Kothari, Hexaware’s Atul Nishar and Arpwood’s Rajeev Gupta besides venture capital firms SAIF Partners and Accel India.
Acko got registered in August last year under its parent company Acko Tech. The company recently got an in-principle regulatory clearance to launch a general insurance business in India. Varun Dua, who had founded Coverfox with Devendra Rane, has left and moved to Acko.
Varun says that the decision to launch a general insurance business was to fill the gap for low-cost, small-ticket insurance products based on data analytics. He said,
The insurance industry is growing rapidly at 15-20% CAGR. However, Acko is the first tech startup in the insurance business, which has so far been dominated by traditional businesses. There has been a gap when it comes to cheaper products, since distribution costs are very high. This is why we decided to apply for a general insurance license.
He also added that the final approval for the general insurance business will take a few more months. Acko will be a multi-line insurance company, with a focus on different areas, Dua said.
The company will spend significantly on building technology, especially in data analytics, and in distribution. It will also spend raised money on marketing since Acko is a new brand.
In a statement, Vivek Mathur, managing director at SAIF Partners said,
Consumers need to be given more innovative product choices, at a price point that is designed for them and at an unparalleled convenience and service levels. All of this is only possible within the construct of manufacturing insurance and thus we are delighted to support Acko in being the first fully digital insurer of the country.
Earlier this year, it was reported that Coverfox had filed an application to float a general insurance company to foray into ₹1 lakh crore industry as Acko General Insurance. It was registered with the registrar of companies with an authorized capital of ₹5 crore and paid up capital of ₹5 crore.
The general insurance industry is relatively less cash intensive than the life insurance industry. The companies in this sector turn profitable in around five-seven years. In 2015-16, the general insurance industry underwrote direct premium of ₹96,379 crores, registering a growth rate of 13.81 percent.