ACKO Product Requirements Document(PRD)

Date :- 23rd March, 2023

Author :- Keshav Thareja

Overview
In simple words, insurance or an insurance policy is a promise. In slightly complex terms, it is a
contract. In technical terms, it is a legal document that guarantees financial assistance in
challenging situations and is governed by terms and conditions and is offered by the insurer to a
policyholder, in exchange for a premium. Nowadays, you can purchase online insurance in a
quick and convenient way from your smartphone.

ACKO

⦁ ACKO is an IRDAI licensed General Insurance Company which offers car/bike

insurance,health insurance and COVID-19 health insurance.It offers hassle-free claim
settlement experience to customers by keeping the entire process online and automated.
⦁ ACKO started in 2016 as India’s first digital insurer, and are currently the fastest growing
insurance company in the country. It has over 50 million unique customers.
⦁ ACKO General Insurance offers cashless claim settlements for car/bike insurance and health
insurance for partner garages & hospitals
⦁ ACKO aimed to harness the technological potential to transform customer insurance
experiences and offer innovative, tech-enabled solutions that capably address the problems
associated with traditional insurance
⦁ ACKO, which has raised a total funding amount of $458 million to date, is a technology-first
insurance company with its products made directly available to consumers through a digital
platform.
⦁ The company has an impressive claim settlement ratio of 95% for FY 19-20. It is also
recognised as the 8th best InsurTech company by FinTech Global in 2019.

Market Size

⦁ The estimated size of the global insurance analytics market in 2020 was USD 8.8 billion, and it
is anticipated to grow to USD 20.6 billion by 2026, at a CAGR of 15.1% over the forecast period.

⦁ The penetration of insurance (as a % of GDP) in India reached to 3.71% in FY19(life insurance
2.82% and non-life 0.94%).

⦁ Health insurance increase in premiums at 6% growth year-on-year basis at $553.93 million

⦁ The gross premium collected by the Indian insurance companies increased to Rs 7.31 trillion
in FY21 from Rs 2.56 trillion in FY12.
The Above graph depicts that while the penetration of Life Insurance has been fluctuating, the
penetration of Non-Life Insurance has been rather consistent.

With new intensification strategies and technologies adopted by private organizations the
importance of insurance has increased in the market. Digital technology is the new force that is
driving massive and rapid changes in every industry of the market. Insurance industry is
witnessing the digital technology – by ensuring purchase of online insurance, introduction of
artificial intelligence and automation for faster claims settlement, new customized and innovative
products for personalization, data collection from internet of things (IoT) and interaction on
social media and promoting research for new innovations in the industry – to scale their
business model making the business structure more convenient for better customer experience.
New digital technologies are changing the way customers interact with insurers.

DARCI

Decision Maker: Product Manager

Accountable: ACKO Leadership
Responsible: Engineering team, UX/UI team
Consulted: Marketing team, Customer Support team, Data Analytics team
Informed: Legal team, Compliance team
PROBLEM STATEMENTS & MARKET INSIGHTS

Here are some potential problem statements that ACKO could face, along with customer and
market insights where possible:

❖ Problem statement : Low customer trust and confidence in digital insurance platforms

Insight: In a market like India where ACKO is based, customers may have low trust and
confidence in digital insurance platforms due to a lack of awareness or past negative
experiences with insurance providers. According to a survey by EY, 65% of Indian consumers
do not fully trust insurance companies.

Solution: ACKO could work to build trust and confidence with customers through transparency,
communication, and education. This might involve providing clear information about how
insurance works, offering personalized recommendations, and providing regular updates on the
status of claims or policies. Additionally, ACKO could consider partnering with other companies
or organizations to offer insurance as part of a larger bundle, which may help customers feel
more secure and confident in their purchase.

❖ Problem statement: Difficulty in meeting regulatory compliance requirements

Insight: The insurance industry is heavily regulated, with strict requirements around data
privacy, financial reporting, and other areas. Compliance can be a major challenge for insurance
providers, especially those operating in multiple markets with different regulations.

Solution: ACKO could prioritize compliance in all aspects of its operations, working closely with
legal and regulatory teams to ensure that it is meeting all requirements. This might involve
investing in compliance technology, conducting regular audits and assessments, and providing
ongoing training and education to employees. Additionally, ACKO could seek to build strong
relationships with regulators and other stakeholders to stay up-to-date on changes in
regulations and proactively address compliance issues.

❖ Problem statement: Limited market penetration in rural or underserved areas

Insight: In many countries, including India, there may be significant gaps in insurance coverage
in rural or underserved areas. These areas may be more difficult to reach through traditional
distribution channels and may have different insurance needs than more urban or affluent areas.

Solution: ACKO could develop targeted strategies to reach customers in rural or underserved
areas, such as partnering with local organizations or leveraging mobile technology to reach
customers in remote areas. Additionally, ACKO could consider developing insurance products
specifically tailored to the needs of these customers, such as crop insurance or health insurance
with specific coverage for common rural illnesses.
The purpose of this report is to establish the relationship
of subsequent changes in the General Insurance Industry
of India with the advent of digitalization using an in-depth
product report of Acko general insurance limited.

THE JOURNEY SO FAR-ACKO

- Resources

⦁ Acko is one of the two insurance startups in India which are licensed by the IRDA and has
superior technological capabilities in the form of comprehensive AI algorithms and blockchain
technology. Such reliance on technology provides significant operational efficiency in the
underwriting process.

⦁ ACKO provides a better customer experience and to eliminate the pain points associated with
the traditional model, offering a seamless journey that requires zero paperwork, from purchase
and claims to renewals.

⦁ Acko has a vast network of partners like Amazon, Zomato, Oyo, redBus and 35+ prominent
players in the internet ecosystem.

⦁ The company is backed by big investors like SAIF Partners, Accel, Amazon, etc. It also has a
number of individual investors and industry stalwarts like Binny Bansal, Narayan Murthy, K.
Gopalakrishnan, etc. who provide constant support and mentoring.

⦁ Acko currently has around 600 employees hailing from diverse backgrounds, possessing
diverse skill sets.

⦁ The company has also made a strategic acquisition of a car-buying portal named VLer
Technology, to leverage VLer’s knowledge of customer behavior in the automobile market. This
would allow Acko to know their customers better, and come out with better offerings suitable
over the entire lifecycle of a vehicle
 Figure: Major Partners of Acko | Source: Company Website

- Processes

⦁ Acko follows a data-driven automated approach for various processes like pricing, purchases,
and clam settlements.

⦁ For the settlement of small-ticket auto claims, micro claims, and SCLIP claims, Acko provides
a 100% paperless method for both “cashless” and “disbursement” for the insured to claim their
insurance amount.Key components of the application such as photographs are analyzed
digitally and settlement is provided to the insured in a short period of time.

- Priorities

⦁ The company is consistently working towards increasing its customer base and is focussing on
generating high volumes of sales.

⦁ Acko has introduced small-sized offerings like cab trip insurance, hotel stay insurance,
electronics insurance, etc., using its partners which are spread across a diverse range of
industries.

⦁ In a short span of 3 years, Acko has over 50 million unique customers, and its prospects of
achieving break-even point look promising.
ACKO - REVENUE MODEL

Acko makes money through its insurance schemes. They have got various sorts of
customer-friendly schemes. Due to their customer-centric policies, the company has got 5-star
ratings and over 4.5 crore, happy users. They provide their customers with phenomenal user
support and with this, Acko has earned the customers' trust as well.

Acko generates revenue from two sources - Premiums Earned and Interest Income. Company
recognizes the premium when it has fulfilled its obligations towards it.The company further
invests the premium received in multiple investing avenues like 45% in Government securities
and treasury bills, 40% in Bonds & debentures and 15% in Mutual funds and fixed deposits.We
have calculated all these values using the Financial Year 2020 Annual report.
In terms of expenses, there are four major headers – Claims, Operating Expenses,
Commissions and Reinsurance. Currently, Acko sells majorly motor insurance and it has a high
claims ratio, thus, 51% of revenue goes into Claims.Commissions are very small part as they
have low count of agents(Majorly selling using websites)The major chunk of expenses is
Operating expenses and in that, the company does a lot of advertisement which accounts for
60% of operating expenses.

Investments and Growth Drivers- ACKO

Acko has raised up to $458 million in its 6 funding rounds including seed round, Series B, Series
C followed by two Series D funding. The figure shows various funding rounds conducted by
Acko general insurance company throughout its growth journey.
-GROWTH DRIVERS

● Digital seepage

Table: Internet users in India|Source: Statista

● Economy

GDP is expected to grow at 10.5% in 2021-22 and by 6.8% in 2022-23 according to the
IMF forecast.

According to the IRDAI’s statistical data, dated 31.12.2019, it showed that Acko has grown
substantially and been able to capture a market share of the disintegrated general insurance
market. The company is growing at 215.14% over three years since its incorporation, attained
0.21% of market share and ranked at 28th position among 32 general insurance players in the
year ended March 31, 2019. These substantial investments and growth convincingly show the
immense potential of the company to grow and capture greater market share.
Acko also posted Rs 81 crore in Gross Written Premium in the first quarter of FY22. The
company has seen a growth of 1.16 times for their auto business in contrast to the same quarter
of FY21. New customer growth from non-metro cities also saw around 3.5 times growth during
the same period of the year. For the metro cities, the growth was around 2.5 times.

The website of Acko currently sees 4 million+ users in a single month and has witnessed an
increasing graph when it comes to traffic, which surged by 161% in the April to June quarter of
FY22 when compared to the same time period in FY21.
GOALS and METRICS trying to move:

❖ Goal: Increase customer acquisition

Metrics:
1. Number of new customers acquired each month
2. Conversion rate of website visitors to customers
3. Conversion rate of website visitors to customers
4. Cost per acquisition (CPA) for each marketing channel
5. Customer lifetime value (CLV) of new customers

❖ Goal: Improve customer retention

Metrics:
1. Churn rate (i.e., the percentage of customers who cancel their policies each month)
2. Net Promoter Score (NPS), a measure of customer satisfaction and loyalty
3. Average policy duration (i.e., how long customers stay with ACKO)
4. Repeat purchase rate (i.e.the percentage of customers who purchase additional policies)

❖ Goal: Streamline claims processing

Metrics:
1. Average claims processing time
2. Customer satisfaction with the claims process
3. Number of claims processed per month
4. Percentage of claims that are approved and paid out

❖ Goal: Increase revenue from existing customers

Metrics:
1. Average revenue per user (ARPU)
2. Cross-sell and upsell rate (i.e., the percentage of customers who purchase additional
policies or add-ons)
3. Customer lifetime value (CLV)
4. Percentage of revenue coming from repeat customers
North Star Metric: Annual recurring revenue (ARR)

Supporting Metrics:
⦁Customer Acquisition Cost (CAC): The cost of acquiring a new customer through marketing or
other channels
⦁Customer Lifetime Value (CLTV): The total value that a customer is expected to generate for
the company over the course of their relationship
⦁Net Promoter Score (NPS): A measure of customer satisfaction and loyalty based on how likely
customers are to recommend the company to others
⦁Claims Processing Time: The average time it takes for ACKO to process and settle insurance
claims
⦁Policyholder Retention Rate:The percentage of customers who renew their insurance policies
with ACKO each year
⦁Underwriting Profit: The total profit generated by ACKO's underwriting activities, which involves
assessing risk and setting premiums for policies

These metrics would likely be tracked and analyzed through a dashboard or other reporting
mechanism, which would provide real-time insights into the performance of ACKO's initiatives.
By monitoring these metrics and adjusting its strategies and tactics accordingly, ACKO would be
able to optimize its operations and maximize its revenue and growth.

Hypothesis

While I'm not privy to Acko's internal research or development, here are some key hypotheses
that are likely foundational to their business model and approach:

1. Digital-first insurance: Acko's key hypothesis is that insurance is best delivered digitally,
without the need for physical agents or branches. This allows them to keep costs low
and offer competitive premiums, while also providing a seamless and convenient
experience for customers.
2. Personalized pricing and coverage: Acko's second key hypothesis is that traditional
insurance products are too generic and do not reflect the specific needs and risk profiles
of individual customers. To address this, Acko uses data analytics and machine learning
algorithms to offer personalized insurance products that are tailored to each customer's
needs and priced based on their unique risk profile.
3. Seamless claims experience: Acko's third key hypothesis is that customers are often
dissatisfied with the claims process, which can be time-consuming, confusing, and
opaque. Acko aims to provide a seamless and transparent claims experience by
digitizing the entire process and leveraging technology to automate claims assessments
and payouts.

Overall, Acko's key hypotheses revolve around the idea that insurance can be made more
customer-centric, affordable, and efficient through the use of digital technology, data analytics,
and machine learning.
FEATURES

1. User-friendly and intuitive interface

2. Personalized insurance products based on customer data and preferences

3. Instant policy issuance and renewal

4. Transparent and easy-to-understand policy terms and conditions

5. AI-powered claims processing and settlement

USER EXPERIENCE

I can give you a general idea of what the user experience might be like based on best practices
and common design trends.

When designing the user experience for ACKO, the team would likely focus on creating a
seamless and intuitive journey for users. This might involve simplifying the user interface and
using clear, concise language to guide users through each step of the process.

The user experience might start with a homepage that highlights the key features and benefits
of the platform. Users would be able to easily sign up for an account and provide any necessary
personal information.

Once users have created an account, they would be taken through a step-by-step process to
purchase insurance or file a claim. This process would likely involve asking users a series of
questions to help them select the right insurance plan or file a claim efficiently.

Throughout the user experience, ACKO would prioritize transparency and communication with
its users. Users would be able to easily access information about their insurance policies or
claims, and the platform would provide clear instructions and updates as needed.
COMPETITOR’S ANALYSIS

Major Competitors

The following are the top competitors of Acko:

1.Go Digit General Insurance

2.PolicyBazaar Health & Life Insurance
3.Bajaj Allianz General Insurance
4.Tata AIG General Insurance

Comparison with GoDigit

Table : Comparison of Policy Prices of Acko and Go Digit | Source: Company Websites

The company has managed to maintain cost leadership by using lower operational
expenditure.It has raised its operational capabilities by upping the number of financial policies to
960,750.

Acko also uses a non-intermediary model leading to enhanced transaction volumes, helping in
enhancing customer experience, thus increasing loyalty. With plans of working on web
aggregators and marketplaces to further expand the target base and embedding the process of
obtaining insurance along one’s journey will further the idea of seamless claim settling.

Acko General Insurance has a significantly high settlement ratio of 97.22% as compared to its
competitor Go Digit which has a settlement ratio of 96.9%, and Bajaj Allianz which has a ratio of
91.67%.
PRODUCT PORTFOLIO AND BREAKUP

Table: Product Portfolio of Acko|Source: IRDAI

Based on the portfolio above, the growth rate and market share of the different products was
calculated. This was in turn used to analyze the position of the products in the BCG matrix for
growth opportunities.
BCG MATRIX OF ACKO

From the numbers till now it is clear that Acko sales are majorly through direct channels.
If we compare the web traffic numbers for Acko with its main competitor Go Digit:
Acko has a 1.43% conversion rate, whereas Go Digit is mainly focussed on selling through
individual agents indicating that sales of Go Digit are not through the website

Table: Comparison of Online Presence of Acko and GoDigit| Source:Web(2020)

ROLLOUT

The rollout approach of ACKO may involve several key steps, including conducting small pilot
tests, A/B testing, and utilizing various distribution channels to reach a wide audience.

First, ACKO may conduct small pilot tests with a select group of users to gather feedback and
fine-tune the platform before rolling it out more broadly. These pilot tests could help identify any
issues or pain points with the user experience and allow ACKO to make necessary
improvements before launching the platform more widely.

Next, ACKO may conduct A/B testing to compare different versions of the platform and optimize
the user experience. This could involve testing different design layouts, user flows, or
messaging to see which version performs best and generates the most engagement.

In terms of distribution channels, ACKO may use a variety of methods to reach its target
audience. This could include online advertising, social media marketing, partnerships with other
companies, and email marketing campaigns. ACKO may also leverage referral marketing to
encourage existing users to refer their friends and family to the platform.
Additionally, ACKO may utilize mobile apps and other digital channels to make it easy for users
to access the platform from their smartphones and tablets. This could involve optimizing the
platform for mobile devices and ensuring that the user experience is seamless across different
devices and operating systems.

Overall, The Rollout approach of ACKO would likely be iterative and data-driven, with a focus on
testing and optimization to create the best possible user experience and reach a wide audience
through various distribution channels.

BCG ADVANTAGE MATRIX: GROWTH STRATEGY

Figure:BCG Advantage Matrix Showing Movement of Acko Over the Next 5 Year
Acko is currently in the growth phase of its life cycle. Therefore to achieve economies of scale to
enter into the specialized segment in the next 5 years will be difficult. Acko’s 5 year strategy
would be to increase its market share by increasing the number of approaches
to gain competitive advantage by differentiating and entering diagonally right in the
fragmented segment. The short term strategy would thus include increasing its awareness of its
offerings and positioning. Acko’s approach would involve diversifying into new product
offerings and innovation in its existing portfolio to differentiate itself from its competitors, mainly
GoDigit.

5-year Strategic roadmap for implementation that could be used as a

starting point:

Year 1:
⦁Focus on building brand awareness and customer trust through targeted marketing campaigns
and education initiatives.
⦁Improve customer acquisition and retention rates by leveraging data analytics and offering
personalized insurance products and services.
⦁Invest in technology and infrastructure to streamline claims processing and reduce underwriting
risk, while also ensuring compliance with regulatory requirements.
⦁Track and analyze metrics such as CAC, CLTV, NPS, and claims processing time to identify
areas for improvement.

Year 2:
⦁Expand into new markets and customer segments, such as underserved rural areas and small
businesses.
⦁Continue to refine and optimize customer acquisition and retention strategies, with a focus on
driving organic growth and reducing churn.
⦁Develop new insurance products and services to meet the evolving needs of customers and
stay ahead of competitors.
⦁Track and analyze metrics such as policyholder retention rate, underwriting profit, and NPS to
measure the success of these initiatives.

Year 3:

⦁Further expand into new markets and segments, including international markets if feasible.
⦁Explore partnerships and collaborations with other companies or organizations to expand
distribution channels and reach new customers.
⦁Continue to innovate and invest in technology to drive operational efficiency and improve the
customer experience.
⦁Track and analyze metrics such as ARR, CAC, and CLTV to assess the impact of these
initiatives on overall revenue and growth.
Year 4:
⦁Consolidate and optimize operations to drive profitability and margin expansion.
⦁Explore new revenue streams and business models to diversify the company's revenue base
and reduce risk.
⦁Leverage data analytics and machine learning to improve risk assessment and pricing models,
while also reducing fraud and other forms of risk.
⦁Track and analyze metrics such as underwriting profit and ARR to measure the success of
these initiatives.

Year 5:
⦁Continue to innovate and develop new products and services to stay ahead of the competition.
⦁Explore opportunities for international expansion, potentially through acquisitions or strategic
partnerships.
⦁Monitor and adjust strategy as needed based on changing market conditions, regulatory
requirements, or customer needs.

Throughout this 5-year roadmap, ACKO would track and measure progress against its
North Star Metric of ARR, as well as supporting metrics such as CAC, CLTV, NPS,
Claims Processing Time, Policyholder Retention Rate, and Underwriting Profit. By
regularly assessing performance against these metrics and adjusting its strategies and
tactics accordingly, ACKO would be able to drive sustained growth and success over
the long term.
STRATEGY DIAMOND ANALYSIS

Figure: Strategy Diamond Analysis of Acko

Overall, Acko's strategy is focused on leveraging technology and innovation to provide

affordable and personalized insurance products to customers. Acko's customer-centric
approach and its partnerships with other companies help to increase its customer base
and expand its market reach. Acko's use of data analytics and AI also helps to improve
its underwriting and claims processing, which enables it to provide better value to
customers.
The company has been able to scale up its operational capabilities at a rapid pace. Acko issued
a total of 177 policies in December 2017 and in FY 2019-20, it issued a total of 950,750 policies.
During FY 2020-21, the company has delivered INR 422 crores worth Gross Written Premium,
with auto business (63% of the volumes) growing at 23% over FY20. Health insurance business
launched in Q4 of FY20 witnessed INR 68 Cr of GWP during the year. Expenses of
Management (EOM) to net written premium reduced from 150% in FY2020 to 91% in FY2021,
leading to the reduction of combined ratio (Claims ratio + EOM) from 210% to 173%. Company
was able to maintain a healthy solvency ratio of 1.9.

Some potential future aspects of Acko:

⦁Expansion of Product Portfolio: Acko is likely to continue expanding its product portfolio to
include more insurance products that cater to the changing needs of customers. This could
include innovative insurance products for emerging risks such as cyber risks, climate change,
and other emerging threats.

⦁Focus on Technology and AI: Acko has a strong focus on technology and artificial intelligence
(AI) to streamline insurance processes and make it easier for customers to purchase and
manage insurance policies. In the future, Acko is likely to continue investing in technology to
enhance its digital platform and offer more personalized insurance solutions.

⦁Geographical Expansion: Acko has already expanded its operations to other regions in India,
and in the future, it could potentially expand to other countries as well. The company has the
potential to expand its operations to other emerging markets in Southeast Asia, Africa, and the
Middle East.

⦁Partnership with other Companies: Acko is likely to form partnerships with other companies to
offer their customers insurance products. For example, Acko could partner with e-commerce
platforms, ride-sharing companies, or online travel agencies to offer their customers travel
insurance, auto insurance, and other insurance products.

If you’ve reached this far, I appreciate your curiosity and thank you for your patience. Hope you
got something to learn.

That’s me

Currently looking for full-time Product Roles, I absolutely love talking UX/VOC.
If you have any feedback or just want to have a casual conversation, reach out to me on
LinkedIn.