Insure-tech upstart Digit already has a presence in India’s general insurance sector with its offering, Go Digit General Insurance. Now, even as its upcoming life insurance business is awaiting a license to operate in the domestic market, it could well be getting the backing of Axis Bank, one of India’s largest private sector banks.
According to a Reuters report, the third-largest private sector bank in the country is looking to acquire a 10% stake in Go Digit Life Insurance. The bank will reportedly spend around $9 million to acquire the stake in the upcoming life insurance offering, which would value the business at $90 million and put it within touching distance of the unicorn status.
If talks go through, Axis Bank will become the second private sector bank to have acquired a stake in the Go Digit Life Insurance. Last week, HDFC Bank informed in a stock exchange disclosure that it into an indicative and non-binding term sheet with Go Digit Life Insurance and planned to put in up to ₹120 crores in two tranches to acquire a stake of 9.94%.
From the looks of it, Digit’s venture in the insurance market is paying off. Its general insurance offering, which has been in the market for quite some time and offers products such as health, travel and automobiles coverage, is already pretty popular. Backed by names such as American VC firm Sequoia Capital and Canadian billionaire Prem Watsa’s Fairfax Group, Go Digit General Insurance is currently valued at $4 billion.
This development also highlights the ventures of India’s private sector banks into the domestic life insurance market, which accounted for 2.73% of the global life insurance market in 2019. Today, it is the tenth-largest in the world, and clocked a growth of 5.8% during the first half of FY22. It is also expected to grow at a fast CAGR of 5.3% between 2019 and 2023. Life insurance penetration in the country also grew to 3.2% in the fiscal year to 2021.
Axis Bank, for its part, is not new to the insurance market – its partnership with Max Financial has resulted in the offering of several insurance products to customers, including life insurance. It has tie-ups with Bajaj Allianz Life, a leading life insurance company operating in the country, as well.
The investment of Axis in Digit is expected to help the private sector bank improve its own banking offerings and further reach customers.