Mumbai: Acko, supported by big private equity firms like General Atlantic and Multiples Private Equity, plans to invest nearly ₹1,000 crore in its life insurance business over the next five years. According to founder Varun Dua, the company is focusing on adding pure-term insurance to its offerings.
Focus on Protection Products
Currently, Acko offers insurance for cars, health, gadgets, and travel under its general insurance business. The company plans to focus its life insurance strategy on protection, especially term insurance, rather than on investment-linked products.
Exploring Pension and Retirement Products
Acko is also considering offering pension or retirement products, which Dua views as another type of protection. The company will continue to use its direct-to-consumer approach, which has worked well in its general insurance business.
Continued Growth and Expansion
“We’ve already invested around ₹150 crore-₹200 crore, and I believe we’ll end up investing close to ₹1,000 crore over the next 4-5 years,” Dua said.
Entry into the Life Insurance Market
Acko entered the life insurance market a year ago, starting with credit life products and launching a term plan a few months ago. The company is aiming to grow quickly in the ₹55-lakh crore life insurance market. Dua emphasized that life insurance is crucial because it’s one of the most important decisions people make.
Industry Outlook and Focus on Term Insurance
A recent report from Swiss Re expects strong growth in the life insurance business, with premiums increasing by 6.7% from 2024 to 2028. This growth will be driven by rising demand for term life insurance from the middle class, the country’s young population, and the increasing use of Insurtech in the industry.
No Focus on Investment-Linked Products
Dua stated that he doesn’t see insurance as a great investment. Therefore, Acko will focus on offering pure protection products like term plans, possibly linked to credit, and will not launch investment-related products. The company recently introduced a flexible-term plan, allowing policyholders to adjust coverage based on their life stage.
Potential for Pension Products
In the future, Acko might explore pension or retirement products, which Dua describes as protection for those who live a long life after retirement. He explained, “Term life insurance is for covering the risk of dying too early, and a pension product is for protecting your lifestyle when you’re no longer earning.”
Aiming for Leadership in Term Insurance
However, Acko’s immediate focus will remain on term life insurance. The company doesn’t aim to be the largest life insurance player but intends to be a leading provider of term insurance. “We don’t have a goal to become a huge life insurance company. We want to offer the right products that add more value and provide a better experience for customers,” Dua said. He added, “I can confidently say that we’ll be a dominant player in the term insurance market over the next five years.”
Direct-to-Consumer Approach
Acko’s life insurance strategy will continue to build on its successful direct-to-consumer approach from its general insurance business.
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