Digit Insurance, a digital insurance company that is Fairfax-backed, has raised up to $200 Million with Sequoia Capital India and new investors Sequoia Capital Alternate Asset Managers, and existing investor Faering Capital. Digit is valued at $3.5 billion with this funding round.The approval of the Insurance Regulatory and Development Authority of India is required for this fundraising.Digit was the first unicorn in the year, with a value of $1.9 billion. After existing investors contributed Rs 135 crore in January 2021, Digit was able to achieve a $1 billion plus valuation (Rs 14.050 crore), in just three years of operation.Kamesh Goyal, Chairman and Founder of Digit Insurance, stated that this was one of the largest funding rounds in Indian insurance. It brought the total capital invested into Digit Insurance to $442 million."Insurance requires that one maintain a certain solvency margin. This is similar in concept to banks' capital adequacy ratio. He said that a rule of thumb is to give 30-35 percent as solvency margin for any premium you write."Solvency margin, which is the minimum capital requirement for insurance companies, is 150 percent. It is mandatory for all insurers.Also read: How Digit Insurance became an unicornDigit was established in 2017 and is based in Bengaluru. It was founded by Goyal who is an experienced insurance professional with over 30 years of experience in this sector. The company offers a range of products including motor, travel, fire, and health insurance.With methods like smartphone-enabled self inspection and audio claims, the insurer uses technology to streamline processes for customers. It is 100% on the cloud.Prem Watsa Chairman Fairfax Financial Holdings stated that Digit's products are relevant, technology-enabled and simple processes, as well as their customer-centric approach, set them apart.Digit witnessed a 44% increase in gross written premium from Rs 2,243 crore to Rs 3,243 crore for FY21. Digit has over 20 million customers, and has processed more than 400,000 claims since its inception.Goyal stated that the funding round would provide enough funds for the next 18-months once it is approved by IRDAI. Goyal stated that the company hopes to get the approvals in place by September 2020.TVS Capital Funds and A91 Partners are among Digits' investors, as well as cricketer Virat Kohli, Digit employees, and Virat Kohli.Digit's solvency margin was 201 percent as of March 31, 2021. Goyal stated that funding was required to maintain solvency for the period October-December 2021, given the rate of growth."It was a challenging year for economies around the world, but Digit is proving to be a strong company that continues to focus on simplicity and keeps pace with the industry. Goyal said that we will continue to work on increasing insurance penetration and simplifying the processes through technology.Digit is also a participant in the IRDAI sandbox initiative, where products can be pilot tested for six months. Digit launched a health insurance policy for COVID-19 in the early days of its pandemic, March 2020.
