Do we buy insurance or are we sold? — Acko vs Go Digit
A tale of numbers.
TLDR: The numbers seem to indicate that people are sold insurance manually and they don’t buy it themselves via the internet.
If you have shopped around trying to find cheaper vehicle insurance you would have landed at Acko or Go Digit. Ever since I bought my car in 2014, I have been hopping between insurance providers to get a rate cut and finally landed on Acko last year. The experience was pretty good — Keyed in my car number and it magically pulled all the details ( I know — one person’s magic is another person’s privacy infringement ), it showed me a quote (competitively low), I hit purchase and done.
I couldn’t see a reason why Acko wouldn’t take over the motor insurance world. In this post, I show how Acko isn’t taking over — not at the pace I hoped it would anyway.
Note: As with any narrative-driven post, the interpretation of data being presented here might have a narrative bias. I urge the reader to go through the post with skepticism and criticize it as needed.
Acko and Go Digit were granted their “Certificate of Registration” by IRDA in September 2017. IRDAI needs a company to have a net worth of >200 Crore Rupees to be considered for a general insurance license. Acko went ahead and raised 35M$ in VC seed money to do this. Go Digit, on the other hand, is backed by Fairfax financial holdings, a rather mainstream insurance investor.
As of this post, Acko provides motor, personal accident, and liability insurance, Go Digit provides motor, personal accident, liability, fire and travel insurance.
Since both Acko and Go Digit went live roughly around the same time (December 2017) and seem to have adopted different strategies towards selling, Acko primarily sold digitally and Go Digit sold through people on ground — A comparison between both is a good proxy to compare people buying insurance themselves through online portals vs them being sold insurance by a person.
Acko vs Go Digit, let us look at some data
IRDAI has a nice collection of data from all the insurance providers updated every month. My only issue is that the data seems to be manually compiled into XLS sheets every month, with a non-standardized naming scheme and formatting — but hey something is better than nothing.
Acko’s growth seems to have been very slow compared to the massive bump up seen in Go Digit’s numbers. As of September 2019, Acko has about 0.172% and Go Digit has about 1.036% market share (Market share = (Premium collected by the Insurance company / Total premiums collected by the general insurance industry)*100 for the financial year). For comparison, The New India Assurance Company has the largest market share currently at 14.111%.
Here is how the monthly premium collections looked like so far. Go Digit clearly ahead in the race.
I do not know the reason behind the massive spike in March 2019 in Go Digit — Happy to hear why.
Here is a comparison of the web traffic to acko.com and godigit.com from April-June 2019 sourced from Similarweb. Acko has far more web traffic compared to Go Digit. Acko is a clear winner in the website game.
Policies sold via different channels
From the public disclosures (Form NL-40) required by IRDA— here is a breakdown of the number of policies sold via different channels for April-June 2019 for Acko and Go Digit.
Some terminology before concluding from the above numbers:
Individual agents here are folks who sell insurance while receiving a commission.
Agents ( Bank ) are banks that sell insurance to folks who walk into a branch.
Agents(Non-Bank) are companies that have employees selling insurance, these could be tie-ups with car dealers.
Brokers are either offline brokers or online sellers who sell insurance through their sites, for example, Someone like Ola selling Acko’s ride insurance.
Direct are either sales booked through the insurance companies website or people employed by the insurance company.
From the numbers above it’s pretty clear that a bulk of the Acko and Go Digit sales are through the direct channel, with Acko having good numbers from Brokers as well (Possibly their tie-up with Ola/Amazon).
From the Similar Web traffic numbers above if all the direct sales (April-June 2019) of both Acko and Go Digit were to be attributed to website sales here is how the website landing to sale conversion numbers would look like.
While it is believable for Acko to have a 1.43% conversion, It is hard to believe that Go Digit would have 69.3% of people buying insurance after landing on their website, indicating a sale through people employed by Go Digit and not through the website.
In summary from the above data — it seems like Go Digit has had massive growth by not going all-in on the web only sales push, maybe we aren’t there yet as a country to self consume insurance products beyond the Bangalore/Koramangala bubble.
Note: I am not ruling out inefficiencies in the insurance companies themselves, there could be factors of bad product/sales/tech leadership which could have lead to these numbers. I am just assuming both the companies are doing their best in terms of the strategies they have chosen.
Bonus section — Savvy customers claim more
If you have read this far, here are some more interesting numbers.
From the public disclosures (Form NL-25) required by IRDA, here is a breakdown of the number of claims settled during April-June 2019
Interestingly, Acko (After taking into account the market share) has 35% more claims than Go Digit. My read of this is that savvy customers who know how to claim easily will claim.
Bonus Bonus section — Motor Vehicle Act
The amendments to the Motor Vehicle Act came into force on 1st — September 2019, steeply increasing the fines for violations, including the violation of not having active motor insurance. This led to a surge in the monthly premium collections in the General Insurance Industry, you would have also noticed the uptick in the graphs above towards the end.
For September 2019 — The overall premiums collected by the general insurance industry increased by 53.86%. Go Digit’s premium collections went up by 60.01% and while Acko’s website traffic surged to a new all-time high, Acko was able to register a collection increase of only 42.72%.
*cough* people are sold insurance, people don’t buy insurance *cough*
Closing notes: It looks like we aren’t there yet in terms of people landing on a website and purchasing insurance. Optimistic outlook would be that there is so much that can be done, maybe beyond making it easy to pay for insurance, we need a fundamental change in how insurance products are perceived — My understanding of insurance is that it reduces anxiety, about the unknowns, things that can go wrong and most products don’t seem to convey that enough. ( If you have been interacting with us at Base, anxiety reduction in Fintech products is something we constantly speak about ).
