No man left behind: How insurtech is

INTERVIEW No man left behind: How insurtech is solving the underinsurance mess

Most problems in the industry seem to be ‘self-created’.

In 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.

Insurtech’s role

Insurtech’s role in the insurance space is clear: they create insurance 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

Why is digital insurance penetration rate still at 2%? There’s a massive accessibility issue

Raunak Mehta, Co-founder and CEO, Igloo

in the market, and provides it. An example is how Igloo helps Thailand telecom giant, AIS, develop its Phone Screen Protection insurance cover and Mobile 360. The cover encompasses repair services for more than 200 mobile brands and models.

Another role insurtechs bring to the table to help fill the underinsurance gap is that it makes insurance a lot cheaper and therefore a lot more accessible for lower- to middle-income earners.

According to a report by McKinsey, consumers are attracted to insurance products created by insurtechs and partners because they sometimes offer selective discounting based on the intersection of smart devices and risk-minimising behaviours from activities, such as exercising or even just going out for a drive.

Insurtechs are also majorly focused on marketing and distribution. This enables them to solve customer pain points through a digitally enhanced client experience more efficiently than insurers.

This is because, along the insurance value chain, 37% are active in distribution whilst 23% are in pricing. Within distribution, around 75% of insurtechs are focused only on enabling distribution by making products available to customers at their convenience, facilitating product comparison, and simplifying the purchasing process.

A tech company first

With Igloo dominating in SEA, their next target is the rest of Asia and the world. Raunak said that as Igloo’s leader, he is aiming to reach their number one goal: insurance for all.

“For the countries, we have already entered [into], we are planning to penetrate the markets more. Provide our superior technology, provide the wide range of insurance products that we can bring to the markets with our industry partners,” Raunak added.

Insurance for all

Raunak’s track record with Igloo since joining the company in 2018 has been abundant. He spearheaded the company’s entry into the Philippines, Vietnam, Thailand, Indonesia, Australia and Malaysia. whilst establishing partnerships with industry leaders such as Lazada, Shopee, Bukalapak, AIS, RedDoorz, foodpanda, Lotte Finance, and Ahamove across a range of insurance products.

With more than 30 marquee partnerships and an ever-increasing regional footprint, Raunak said they are on track to achieve their goal of facilitating 5% of General Insurance Premiums in SEA over the next five years. In 2021 alone, Igloo’s insurance solutions helped underwrite over 75 million policies in Southeast Asia.

These achievements are also acknowledged by their investors. In its last funding round, Igloo closed a $19m Series B funding round led by Cathay Innovation, a global venture capital firm, with participation from ACA and other existing investors including Openspace. This brings Igloo’s total fundraising to over $36m.

Igloo is currently busy with left and right partnerships in different markets in SEA. In Indonesia, Igloo worked together with one of the country’s top e-wallets DANA in creating Gamer’s Protection, targeting avid video gamers in Indonesia who worry about health risks associated with gaming. This was the second insurance product created by the two since the launch of Electronic Gadget Insurance in October 2021.

The company is not just stopping with tech firms. It has also continued to grow from various partnerships with insurance firms. Most recently was its expansion in the Philippines where it signed up with local insurers like Etiqa, Malayan Insurance, PGA Sompo Insurance Corporation, and Mercantile Insurance, as well as 12 other commercial partners across finance, logistics, lifestyle, and travel sectors.

Igloo’s most successful partnership is with the country’s top e-wallet provider GCash where it managed to offer microinsurance plans such as Online Shopping Protection cover, Gadget Insurance, and Pet Insurance to GCash’s 60 million users.

“We are a tech company first and then comes insurance because we believe that using technology the right way [and] building the right infrastructure will help us scale faster and better than the competition and thereby bring a good value proposition in terms of good products and services to the end consumer,” he concluded.

Igloo’s number one goal is “insurance for all”

Insurtechs solve customer pain points more efficiently than insurers