Insurtech pioneer Acko is charting a course towards profitability, eyeing fiscal year 2026-27 as the turning point, reveals founder and CEO Varun Dua in an exclusive interview with investment bank UBS Global.
Dua outlines ambitious targets, aiming to close FY24 with a premium of Rs 2,000 crore and projecting a robust 35% year-on-year growth trajectory. As of December, Acko has already notched premiums of Rs 1,360 crore, indicating promising momentum.
Strategic Growth
A pivotal aspect of Acko’s strategy lies in harnessing the profitability of its general and health insurance segments. Dua shares insights during his dialogue with UBS, indicating that 60% of the auto portfolio is on the cusp of profitability, poised to achieve full profitability within the next 18 months.
Moreover, Acko anticipates its general insurance business, including the nascent health segment, to reach full profitability by FY27.
Premium
Delving into Acko’s premium composition as of January 2024, the motor segment commands approximately 43-44% share. Within this segment, motor own damage (OD) accounts for 16%, while motor third-party (TP) claims 27%.
Meanwhile, health insurance constitutes a substantial 48% of Acko’s premiums, with group health comprising 44% and the recently initiated retail health segment contributing 2%.
Diversification
Acko’s foray into embedded products, particularly micro-insurance, has proven lucrative, constituting 8% of its premium mix and exhibiting a remarkable 50% year-on-year growth rate. Notably, 50% of retail health insurance sales stem from existing motor customers, effectively reducing customer acquisition costs for the company.
Strategic Ventures
The recent establishment of Acko’s life insurance arm, focusing on term plans, signals a strategic diversification effort. Although in the beta stage, this venture underscores Acko’s commitment to broadening its product portfolio and market reach.
Customer Retention
Central to Acko’s operational ethos is a relentless focus on customer satisfaction and retention. Impressively, the company boasts retention ratios of 73-74% at the 13th month and approximately 85% at the 25th month within the auto insurance segment.
Acko’s emphasis on seamless service extends to partnerships with workshops, with 65% of claims reported directly, bypassing dealer intervention. Moreover, garages aligning with Acko’s brand vision further streamline operations, reducing costs and enhancing visibility.
Conclusion
As Acko steers towards profitability by FY27, its strategic imperatives underscore a commitment to innovation, diversification, and customer-centricity. With a robust growth trajectory and a focus on operational efficiency, Acko remains poised to redefine the insurtech landscape.
