Bangalore based Acko recently raised a $60 million series D round where Amazon, an existing investor also participated in. Munich Re, one of the world’s largest reinsurance companies also participated which also marks their first investment in India. The 3-year old startup is now valued at $500 million and is quickly grabbing attention as a new digital first insurance carrier in India with more than 60 million members. 

It originally gained popularity by offering small auto insurance policies for drivers (including cab drivers) and then expanded to small bike insurance, reflective of the market demand. Its health insurance offering is a recent expansion with about 150,000 covered members.

What’s offered? How does it compare to US Insurance?

They offer an individual insurance policy for about 3000 rupees ($40 dollars) to a middle-aged male which covers claims up to 5 lakhs rupees (or ~$6800 dollars). An average indian makes about $2000 per year, and this policy is actually priced lower than a traditional $50 policy. Their network consists of more than 5,000 hospitals and 2,000 clinics in 102 cities across India. The policy covers hospital visits, outpatient surgery including cataract surgery (with many centers of excellence in India), medical costs, ambulance costs, as well as dental & plastic surgery (non-cosmetic). Interestingly, the plan also covers ayurvedic treatments. While generously offering to pay up to 95% of claims with a 5% co-pay, Acko has some strict policies in place to prevent cost ballooning including:

  • Will not pay more than 5000 rupees ($67.9 dollars) per hospital day stay.
  • Require a 48 month wait period before covering claims for pre-existing conditions.
  • Will not pay more than 2000 rupees ($27.2 dollars) per ambulance ride.
  • A young Indian startup that is taking on the country’s antiquated insurance industry with a digital-first product — and which has already received backing from global giant Amazon — today announced a new financing round.

    Acko is able to offer low priced premiums by not using middle-men or brokers and its underwriting practice is reportedly pretty accurate. Of course, the third and obvious reason is that it caps payment of high cost items like hospital stays and ambulance rides among others.

    The India market is large, 1.3 billion people large, and this offers a big opportunity for Acko to scale. It will face challenges including how to sell to an educated, affluent, and growing middle class that expects expanded benefits and fewer restrictions. New cost cutting measures will have to be used and this is where it can borrow some best practices including population health management, and integrated care to promote preventative care.