Acko gears up to disrupt the life insurance space

Two sources in the know told ET that Acko is in the final stages of launching its first life product in August or September.

“It will be a pure play term life product and will be aimed at customers who are comfortable buying products online,” said a person in the know.

Acko has hired Amit Tiwari, an ex-Amazon India executive, to lead its life insurance business. One of the sources told ET that Acko is yet to get a formal nod from the insurance regulator IRDAI regarding Tiwari’s appointment.

If the launch goes through, India will see the first major tech led disruption in the life insurance sector. The last time a new life insurance company was licensed in the country was in 2011, much before startups became vogue.

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Simple product to begin with

One of the sources added that Acko, which focussed on direct-to-consumers approach for its general insurance business, will replicate a similar strategy for its life insurance business too.

“The thinking at the company is simple, the future is online, the next generation consumers will look for products online and that is where Acko wants to be,” said one of the persons quoted earlier.

“Even if that means growth is slow, the management team at Acko is comfortable with a steady yet slower growth curve, but intends to build a direct relationship with the customer,” he added.

Emailed queries to Varun Dua, founder of Acko, went unanswered.

The company could be looking at a simple and easy to understand term insurance product where there is no return guaranteed, but there will be a sum assured in the event of an untimely death.

A lot of life products sold currently are actually investment products, but Acko might not go for such products right away, the person quoted earlier said.

Market waiting to be disrupted

The life insurance business in India is much bigger than the general insurance space. With a share of 76% amounting to $96 billion in terms of premium collected for life business, this is a large market. Additionally, after Covid-19 and the general increase in awareness about term insurance products, this market is growing consistently.

According to data from IRDAI, insurance density for life products has gone up to 69 in 2021-22 from around 9 in 2001-02. Insurance density is a measure of insurance premium collected over the population of the country.

A recent industry report released by insurance aggregator Policybazaar showed that among 18-30 year old young respondents, the interest to buy a life insurance product increased to 33% in 2023 from 18% in 2019.

A large chunk of the respondents also told Policybazaar that they would search for the best products online before they bought a life product. But even now, a bulk of the life products sold are through agents who play a critical role in the decision making process.

“With time more people will look for products online first and then take a final decision. For Acko, the idea is to offer the best product at the most competitive price online,” one of the persons quoted above said.

Fresh competition

Like in the general insurance space, Digit and Acko started operations almost at the same time.

Go Digit Life, another new age insurance company, also got the licence recently.

GoDigit Life has appointed Srinivasan Parthasarathy as its new CEO. Parthasarathy was with HDFC Life in his previous role. Digit has already received strategic funding from HDFC Bank and Axis Bank, each picked up 10% stake in the company.

“Digit could adopt a mix of both direct-to-consumer as well as through partner banks, we will see how the two new entities will compete with each other,” said a founder of an insurance startup which helps distribute general insurance products.

In the general insurance business by the end of FY23, Acko had collected a gross premium of Rs 1,509 crore, with a bulk of business coming from motor and health. GoDigit collected agross premium of Rs 6,160 crore in FY23 with half of the business comin g from its motor business.