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Insurtech startup Acko aims for profitability by FY27

Acko, the insurtech startup, plans to be profitable by fiscal year 2026-27, as its general and health insurance segments turn profitable, says founder Varun Dua in an interview with investment bank UBS Global.

Dua sets a goal for Acko to reach a premium of Rs 2,000 crore by the end of FY24, anticipating a 35% year-on-year business growth. As of December’s nine-month period, Acko has already achieved premiums of Rs 1,360 crore.

Dua was in a chat with UBS, explaining the dynamics of the business. 

“As per the management, 60% of the auto portfolio is already profitable with expectation of becoming fully profitable (auto segment) in the next 18 months. It expects general insurance (GI) business to be fully profitable by FY27, including the health segment, which they have recently started,” read the UBS report. 

As of January 2024, Acko currently gets approximately 43-44% of its premiums from the motor segment. This is divided into 16% for motor own damage (OD) and 27% for motor third-party (TP). Health insurance makes up about 48% of Acko’s premiums, with group health contributing 44% and retail health, a recently launched segment, contributing 2%.

“As per the management, embedded products (micro-insurance) which contributes 8% of the mix is already profitable and is growing at a 50% rate year on year. As per the management, 50% of the retail health insurance has been sold to its motor customers (directly to customer) driving customer acquisition cost (CAC) down for the company,” the report added. 

Recently, Acko launched its life insurance company with a focus on selling term plans, currently in the beta stage.

Moreover, the company emphasizes retention rates, boasting a retention ratio of 73-74% for the 13th month and approximately 85% for the 25th month in the auto insurance segment.

“The focus of the company is to create a niche in servicing, through partnering with workshops in a seamless manner (about 65% of the claims are reported directly with no dealer intervention). As per the management, garages are now setting up workshops with their capital using the Acko brand, which can help Acko in further reducing costs and bring in higher visibility,” the report added.

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BRL Editorhttps://businessreviewlive.com
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