“While a lot of insurance companies have gone the digital way but we believe that just being online or having technology enabling processes is not enough”

Bangalore-based online insurance startup, Digit Insurance, is building a technology-driven platform that offers customised products at reduced cost. The firm has launched products across three categories — motor, travel, and personal accessories. However, what makes it stand out from its peers is that its unique approach; for example, it covers fight delays starting from 75 minutes and above and also covers you if the arrival of your checked-in baggage is delayed by more than two hours. Additionally, it offers theft and accidental damage insurance for jewellery, and mobile phones, besides advance cash for their repair.

Digit Insurance recently bagged US$45 million in funding from Canadian billionaire Prem Watsa’s Fairfax Holdings, in what could be one of the biggest funding round by an online insurance startup in India.

e27 recently had a chat with Vivek Chaturvedi, Head of Marketing at Digit.

Here are the edited experts from the interview:

There were quite a few digital insurance startups in India already when Digit entered the space. What made you a huge bet on this industry then? Is it very lucrative?

When Digit’s initial team — Kamesh Goyal (Founder), Philip Varghese, Jasleen Kohli, Vijay Kumar, Sameer Bakshi, and Adarsh Kishor Agarwal — got together, the one thing that bothered them was how much insurance was mistrusted by people. Terms and conditions that were written to maintain clarity were indeed looked with a skeptical or a helpless eye. They asked themselves ‘why should this industry that should thrive on trust be so full of agony and discomfort?

This introspection led to Digit’s mission to ‘make insurance simple’. For a lot of people in India, this sounded like an oxymoron —  ‘simple and insurance? No way’. Well, for Digit, that’s where the opportunity lied. If there is one thing that would truly make a difference to people in the insurance context, it is busting complexity and bringing in the simpler insurance.

While a lot of insurance companies have gone the digital way but we believe that just being online or having technology enabling processes is not enough. Technology should enable simplicity and that’s the goal for Digit.

What makes Digit fundamentally different from its competitors?

In comparison to other insurance companies, our differentiation can be seen in our products, benefits, claims process and documents.

Customised products:

Everyone has a unique way of living life, using things and for insurance too they may see risks differently but till now they had only standard products to choose from. That’s when Digit thought that products too can be modular, such that they make sense for people and their fears. If someone fears only about their screen’s damage which are 65 per cent of the damage cases in India, they needn’t go full hog and buy a theft and all damages product, they can simply choose to protect their screens only.

We’ve also innovated the way the pay-out for these plans are constructed; they are flat benefit products i.e. if a damage happens, people straight get 20 per cent of the invoice value of their phones. This is from the logic that the approximate cost of a screen replacement is 20 per cent of the value of phone so why go the whole negotiation route. Simple terms, simple pay-out.

Products that can be bought for one’s own family:

People at times know they are covered and move around happily only to be in for a rude shock when they plan to claim. Now to make this simple, Digit planned to think of claim terms in a way they would have made for themselves and their families, really beneficial.

Industry right now has claim terms like six hours of flight delay, six hours of checked-in baggage delay that rarely happen; Digit started with 75 min flight delay benefit (the common ones) and two hours checked-in baggage delay benefit that are the common ones.

There is simplicity in the way they are constructed too, again flat benefits instead of reimbursement ones. So no more keeping coffee bills or running to find bills for items inside a lost bag. We only require simple soft copies of documents that can prove the delay and loss. That’s it.

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And when it comes to flight delay, people don’t even need to claim. Hundred per cent of our flight delay claims are automated, i.e. when a flight is delayed beyond the stipulated time, an SMS is auto-triggered for a claim and people just need to send their boarding pass and their claim money is paid.

Simple, paperless, smartphone-enabled claims:

In one of the consumer researches conducted, a customer said, ‘I know that whenever I will make a claim, there would be something hidden somewhere in the document that denies my claim!’. That’s the sorry state of affairs when it comes to claims; even before claiming, there’s a sense of rejection. So we deep dived into what goes wrong actually and devised solutions. All of this, with their intention of delighting the customer, has led to 87 per cent of our claims being approved in just 24 hours.

Simple documents:

The foundation of any good relationship is clarity in communication. And if you open an insurance document, you’ll exactly know the reason of the fight. Insurance documents are written by lawyers for the common men and women. We took all documents for their new products word by word and re-wrote them in simple English, jargon-less. We also added ‘Digit translations’ to it, i.e. simple translations of complicated definitions. Not just that, we created simple, two-pager summary documents for all plans explaining ‘what’s covered’, ‘what’s not covered’ and ‘claims process’.

And to test the simplicity of this document, we planned a torture test by showing them to kids — 8-15 year olds. The idea was that if these kids got it, adults definitely would.

How did the company manage to onboard a company of Fairfax’s stature as an investor? What is the synergy here? 

With over three decade’s experience in the insurance industry, Founder Goyal realised that India is witnessing a transition in customer aspirations across industries. Eighty-eight per cent of insurance customers demand more personalisation from providers and around one fourth of the cases in consumer courts are relating to insurance companies, which clearly shows that customers are looking for something different. With changing dynamics across he felt the need for a new player in the industry. That’s when he got the opportunity to partner with Fairfax to start our new venture Digit.

Also Read: Amazon India leads US$12M investment in online insurance startup Acko

We believe that the way insurance products are viewed, purchased and claimed can be changed. We plan to simplify insurance products so that even a 15-year-old would be able to comprehend them. We are going back to the basics and building simple and transparent insurance solutions, that matter to people.

Why does a early-stage startup like Digit need a huge capital infusion of US$44 million?

With the additional funding of US$44 million, Digit Insurance plans to invest the funds in technology to drive its mission of making insurance simple. A significant use of fund will also be invested in launching new lines of products and expansion of distribution network across the country.

What are the opportunities and challenges specific to the online insurance sector in India?

Opportunities:

New channels of distribution — With newer channels of buying products, come newer channels of distribution of insurance and that too at the most relevant touch-points. E-commerce is an example which people are using extensively and has opened up as an opportunity for online insurers.

Digitisation of processes — With India becoming more digitally savvy, with an increased penetration of smartphones and its usage, the usage of technology to make processes (including claims processes) more streamlined is now possible. For example the self-survey technology we’ve launched is because we have people happy to use their smartphones for sending us pictures of their asset’s damages.

Fresh outlook — A lot of people say in Digit are from outside the core insurance industry, they are from e-commerce, technology etc. and therefore they bring in a fresh perspective to solve customer pain points

Complicated history — Insurance has not been the most trusted industry and a lot of that is due to the complication around it, in terms of documents and processes. This is a potential gap that can be filled in.

Challenges: 

Trust — Customer mind set across cities are different when it comes to buying a product like insurance online. A lot of people still view insurance as a traditional product and their approach towards that too has been traditional. There are still a set of consumers who find it hard to pair insurance with digitisation. Companies are finding ways to make insurance buying process less documented and cumbersome, but the customers instead of complying to the process, doubt the company for not taking additional information.

Regulations — As more and more companies are taking the digitisation route, the regulatory side will create more protocols for insurers to follow in order to ensure information safety of the customers

What does the future hold for online insurance industry in India?

The mindset of people is slowly changing, they are getting more comfortable with using technology and the need for human intervention in the process is decreasing. This is something which is beneficial to online insurers.

Are there new technologies coming into the online insurance space? How can blockchain enhance this space?

Self-service tools — Like in other customer facing industries, self-service will become big. Like we have a self-inspection app wherein people can inspect their cars themselves instead of waiting for a third-party inspection to happen. And 95 per cent  of our claims are getting done through self-inspections app. This help us process our claims faster, for context 87 per cent of claims are getting approved within 24hours post self-inspection.

Customised products and pricing — With data analysis and insights, it is possible to give a more customised or recommended product with a better pricing to the customer. For example with flight delay data analysis, basis which flight, month, airport, someone is flying from, we can calculate the probability of delay and what cover is suitable and we can give to the same to the customer at the best possible price.

API integration — This is simple but big. Like for us, this allows the partners to make endorsement or cancel policy in case there customer wants to cancel. Cloud makes the transaction to the end customer seamless by avoiding double data entry and a seamless data transfer.

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