INTERVIEW
No man left behind: How insurtech is solving the underinsurance mess
Most problems in the industry seem to be ‘self-created’.
I
n its over 300-year-old history, the insurance industry has yet to bridge the underinsurance gap, especially in Asia—and the incumbents in the industry are to blame for making insurance inaccessible, an industry expert said. Talking with Insurance Asia, Igloo Co-founder and CEO Raunak Mehta said that, currently, the digital insurance penetration rate in Southeast Asia (SEA) is at 2% and is bound to grow to 10% over the next five years. Generally, this may sound good, but for Raunak, this is troublesome. SEA has the biggest smartphone users in Asia. In fact, smartphone penetration stood at 75% in the region. “This means that they have access to basic data. So why is the digital insurance penetration rate still at 2%? That tells you that there’s a massive accessibility issue,” Raunak explained. He then summarised the root of
the problem: an issue of supply and demand meaning that most products available in the market are either too pricey or too complicated and inflexible to the needs of those who need them the most. Most insurance products in the market do not cater to the people in the low- to middle-income population segment. And this segment, according to Raunak, takes up most of Asia’s population. In SEA alone, 60% to 65% of the population are low- to middle-income earners. Raunak explained that most of the insurance prices being supplied for low- to middle-income earners are over their financial capabilities. At the same time, these insurance products are offered through channels not frequently accessed by this segment of the population.
Why is digital insurance penetration rate still at 2%? There’s a massive accessibility issue
Insurtech’s role Insurtech’s role in the insurance space is clear: they create insurance
Most insurance products do not cater to the low- to middle-income population, which takes up most of Asia’s population
26 INSURANCE ASIA
products that target specific needs of consumers at low premiums. And how insurtechs, like Igloo, do it to create real-life applicable products for consumers to purchase. As an example, Raunak detailed how his insurtech firm Igloo and a digital partner created a policy for food delivery riders. In essence, food delivery riders are contract workers for food delivery services. This gives them a disadvantage of not having an employee-employer relationship. What Igloo did was identify the dangers that food delivery riders face every day, the first being income protection in case the rider, during his duties, is to be hospitalised for a number of days. It also created a policy that would cover repairs for motor vehicles and smartphones. This is a one-of-a-kind service that insurtech is able to provide. Igloo works together with a partner company, identifies a specific need
