The Growth Story Going For Go Digit

Go Digit differs from its peers in other ways as well. In an industry where going public came much later, he is doing so within five years. In an industry that chose Mumbai or Delhi as its headquarters, it chose Bengaluru, the technology capital of India.

Go Digit is promoted by Kamesh Goyal, who shepherd Bajaj Allianz Life Insurance in its early years, and is backed by the financial strength of Indo-Canadian entrepreneur Prem Vats. They aim to redeem some of their shares through the issue, which is expected to value the company at over $4 billion. their goal is to raise Rs 1,250 crore in new capital to fuel growth.

From a growth perspective, 2021-22 was a big year for Go Digit. Its gross direct premium underwriting increased by 93 percent. It has carried that momentum forward into 2022-23. For the first four months, it grew faster than all the 12 insurance companies that lead it in market share. Amidst that scorching growth, it is showing tact in managing its business risk. As it expands, it will face challenges on both those fronts.

growth cover

For now, Go Digit feels like it has ample room to grow. Part of this is skewing business and market share from peers. The second part is expanding the non-life insurance market. For example, the draft IPO prospectus cites a study commissioned by the company, which estimated that 62% of Indian vehicles were uninsured in the US in 2019 as against 13%. With greater digitization of road infrastructure and greater linkages across the system (registration, pollution checks, tolls and insurance), this is expected to come down.

The company is making minor losses, but this should be viewed in the context of rapid growth spurts. If risk management is good and claims are reasonable, insurance becomes a cash-positive business at the operational level. This has been for Go Digit. However, it is investing heavily in building a sales network and brand, attracting new business, and strengthening technology. I intend to continue doing so.

segment concentration

At the segment level, the non-life insurance industry in India is a bit one-sided. In the first four months of 2022-23, only two of the eight core segments accounted for nearly two-thirds of the premium collected by the industry.

The share of health was 38% and motor was 28%. Go Digit also has segment concentration. For the company, that is motor insurance, from where it collects about 51 per cent of its premium. Health, by comparison, is just 11%.

Go Digit’s top three segments account for about 86% of its premium. In comparison, the top three segments of ICICI Lombard General, the leading private non-life insurer, account for about 76% of its premiums and are in line with the industry breakdown. Where Go Digit differs is its liability insurance (legal and professional liability cover), a segment that accounts for about 23% of its premiums and is where it leads all insurers.

risk management

When an insurer is growing rapidly, one of the concerns is whether it is building a lousy portfolio and overpaying in the form of claims. Go Digit is enabled and on the upper end. Its net claims ratio, or claims paid in a year as a percentage of premiums collected, stood at 76.4% for the nine-month period till December 2021. In this sense, he was in 13th place. Public sector insurers were close to or above the 100% danger mark. Acko, the other non-life insurer that debuted around the same time as Go Digit and followed an online model, was at 105%.

Go Digit is actively using the technology in its operations, but it has built a multi-channel distribution. In 2021-22, retail and corporate brokers collected 57% premium, up from 42% in 2020-21. Go Digit is building a comprehensive non-life insurance business and is now ready to be judged by the market.

www.howindialives.com There is a database and search engine for public data.

first article