Digit, first unicorn of 2021, in the top 10 non-life insurers


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Mumbai: Digit Insurance, the first company to become a unicorn in 2021, has moved up five places to make the top 10 general insurer in its third full year of operation. The company is expected to end the first nine months of fiscal 22 with a gross written premium of Rs 3,600 crore, an increase of 65% year-on-year.
The company, promoted by industry veteran Kamesh Goyal and backed by Canadian billionaire Prem Watsa’s Fairfax Group, had announced a 135 crore rupee fundraiser from existing investors in January 2021, valuing it at more than $ 1.9 billion (14,000 crore rupees). While the next 12 months were difficult for the non-life sector, Digit stepped up its operations by increasing its market share in auto insurance, expanding distribution, entering new geographies and entering in new sectors of activity.
“This year has been a challenge for the general insurance industry due to the second wave of the pandemic, which has slowed business and increased claims. This year, the automotive industry has also been affected due to an increase in damage claims and a slowdown in sales due to the global chip shortage, ”said Goyal. He added that the company has started a health insurance business led by Covid products and is now present in all lines of business.
In addition to expanding distribution and product lines, the company has increased its claims handling capacity and handles 25,000 to 30,000 claims each month. “We have also demonstrated our ability to pay large claims by settling a fire insurance claim for Rs 140 crore within eight months of the event,” Goyal said. However, the pandemic weighed on underwriting margins, albeit to a lesser extent than the industry. “While most general insurance companies saw their combined ratio deteriorate from 7 to 8%, our combined ratio increased by 3% in 2021 to reach around 110%, as the proportion of health premiums was lower. “said Goyal. The combined ratio compares the cost of claims and management fees to sales.
“The overall expense ratio is going down because of the digital capacity we’ve built. We have a management expense ratio of 36% of net premium written. This is because Digit is a relatively new company and represents a larger share of the retail premium, ”said Goyal.
Many companies have a lower expense ratio because crop insurance, which is a wholesale business, does not increase operating costs. Goyal said the latest fundraiser would be enough for the business to grow for at least a year, as it now has a 300% solvency margin – double the legal requirement.

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