What makes this round interesting is that it happened within a year of InsuranceDekho raising one of the largest ever series A funding rounds of $150 million. Amidst a funding winter, when startups are having to go the extra mile to justify every dollar of their valuation, InsuranceDekho stood out.
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But then, InsuranceDekho is not like every other fintech startup. It’s an online insurance player, but with a strong physical operation. Also, it intends to restrict itself to the distribution space, when a bunch of fintechs have applied for an insurance manufacturing licence.
Even as it plans to get into reinsurance, it is looking to become a broker there.
Field agents
The company has around 1.1 lakh field agents who use its software to sell insurance in small cities and towns of India. It is so bullish about selling insurance through an agent network that it intends to scale up the base to 2 lakh by the end of FY2024.
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“InsuranceDekho offers Indians in small towns an opportunity to make a few thousand bucks on the side, which is a big pull for new agents joining the platform,” said a top executive at an insurtech startup which competes with the former.
As per industry estimates, InsuranceDekho already has one of the largest agent bases in the country.
For context: Max Life Insurance, which is one of the largest private life insurance players in the country, had added more than 6,000 agent leaders and advisors in fiscal 2022.
While distribution through point of sales persons is an established business practice in the country, it is also an expensive one. Many new generation insurtechs believe that in the next decade or so, more and more consumers will start buying insurance online or at least look for products online.
Even traditional insurance companies are investing heavily in their own direct channels. But InsuranceDekho has taken a contrarian bet and it seems to be working out for the company.
Insurance distribution as a sector
InsuranceDekho is in an interesting space, where few of its closest rivals are in very different phases of their life cycles. PBFintech owned Policybazaar, which is the leader in this space, is a public company now. It has been a successful story for many early-stage investors who exited with good returns from this company.
Turtlemint, another major insurance distributor, is already valued at around $900 million and had last raised a major round of $120 million in 2022.
InsuranceDekho has the advantage of being at a good scale and yet was valued at around $450 million in January this year. The company is processing an annual premium collection of around Rs 3,000 crore. Its aim is to double this number.
Policybazaar last reported an annual premium collection of Rs 14,000 crore.
The company wants to go public by 2027. It claims to be profitable in its core insurance distribution business. Overall, it is still in losses though.
Concentration of investor interest
In the insurance space, investors have concentrated on certain companies in a major way. In the distribution space it was Policybazaar, which left Coverfox, its erstwhile competitor, way behind.
In the manufacturing space, it is all about Digit and Acko. Digit, which was planning its IPO but got stuck in regulatory clearances, is already valued at $4 billion. Acko got into the unicorn club in 2021, but has been reportedly in conversations for a fresh funding round for some time now.
“There is a concentration of capital now, there are few good assets and every investor wants to put money in those assets, it’s like public markets, no matter what happens people will want to invest in good companies,” said Ankit Agrawal, chief executive officer, InsuranceDekho.