Abstract
Insurtech is the latest buzz word that is shaking up the insurance world globally. In the simplest terms, insurtech can be defined as insurance coupled with technology. Though insurtech is still believed to be in nascent stages in India, the insurtech start-ups in India are changing the market dynamics to a great extent. The present study aims to analyse the financial soundness of insurtech companies in India and also to compare the financial soundness of these two companies. Two leading insurtech companies namely, Go digit and Acko are taken as sample of the study. The financial data pertaining to these two companies for a period of three years from 2017-18 to 2019-20 was used for the analysis. The financial indicators of CARAMELS model were used for analysing the financial soundness of these companies. Six parameters of the CARAMELS model namely C - Capital adequacy, A - Asset quality, RA - Reinsurance and Actuarial issues, M - Management soundness, E - Earnings and profitability and L – Liquidity were used for the purpose of analysis. Through the results of the study, it was found that the financial soundness of Go digit was better than Acko as in four out of six parameters i.e. capital adequacy, reinsurance and actuarial issues, management soundness and earnings & profitability, it has exhibited better performance. Further only in terms of Asset quality and liquidity Acko was performing better.
Highlights
Though insurtech is still believed to be in nascent stages in India, the insurtech start-ups in India are changing the market dynamics to a great extent
4.1 Sources of Data The study is based on secondary data collected from the published annual reports and public disclosures of insurtech companies in India. 4.2 Period of Study The period of study was 3 years from 2017-18 to 2019-20. 4.3 Sample Two insurtech companies currently operating in the non-life insurance sector of India namely, Go Digit General Insurance Company Ltd and Acko General Insurance Company Ltd. were taken as the sample of the study. 4.4 Tools and Techniques In order to analyse the financial soundness of insurtech companies, following the methodology of Chellasamy & Valarmathi (2017) [5], Ghimire & Kumar (2014) [8], Simpson & Damoah (2008)
The results and analysis of various parameters of CARAMELS model through various financial indicators has been presented below. 5.1 Capital Adequacy Capital adequacy of a company indicates whether it has sufficient capital to meet its claims
Summary
There was a sea through change in the landscape of insurance across the world. The emergence of insurtech start-up companies like Acko, Toffee insurance, Go digit have started changing the market dynamics in the Indian insurance industry in a big way. The monthly business statements of insurance companies in India which are published by IRDAI [1] reveal an interesting fact about two budding insurtech start-ups in the non-life insurance sector namely Go digit and Acko. According to these published statements, both these companies which have a market share of less than 1% have registered a premium growth of 82% and 164% respectively by the end of FY2019-20. The current study has been taken up to conduct a detailed analysis of the financial soundness of these two companies
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