Financial Soundness of Insurtech Companies in India – An Analysis

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.