Although Southeast Asia’s insurtech landscape is still relatively small compared to other regions such as North America and Europe, an array of new startups are betting big on the sector, which is poised to grow by USD 21.72 billion globally in the next three years.
Notable names such as Singapore-based health insurer Singapore Life, Jakarta-based micro-insurance provider PasarPolis, and Bangkok-based insurtech firm Sunday all want their own slice of the burgeoning market.
Singapore-headquartered Igloo, founded in 2016, also wants to challenge conventional insurers with the help of big data, real-time risk assessment, and end-to-end automated claims management, while also making insurance products more accessible and affordable.
Igloo’s founder, Wei Zhu, a former chief technology officer at Grab, decided to launch his firm after analyzing the clunky and sluggish development of the insurance business, he said in an interview.
Fast forward to 2020. Igloo, previously known as Axinan, has grown into a full-stack insurtech firm offering an array of insurance products spanning from calamity, cyber risk, disease, personal accident, travel, and property insurance to Southeast Asian clients.
“Our arena of play was always going to be Southeast Asia. We look at certain indicators that largely have to do with income inequality and how it leads to underinsurance in Southeast Asia,” Raunak Mehta, Igloo’s chief commercial officer, said to KrASIA.
Mehta explained that the region currently has an insurance gap that Igloo is trying to address. “If you were to put a number on how big the insurance gap is, the amount is more than USD 100 billion,” he said. According to the Centre for Economics and Business Research (CEBR), the insurance gap for Asian countries has increased by 9.4% since 2012 to USD 134 billion as of 2018.
Although urbanization and population growth have driven strong demand for insurance products, insurance penetration rate in the region’s developing economies such as Indonesia and Malaysia remains below 5%, a study conducted by US consultancy Bain and Company in 2019 found, far below than the rate of Singapore, at around 12.5%.
The low digital insurance penetration has translated to massive opportunities for firms like Igloo. The company saw its gross written premiums experience a fivefold surge from 2019, with more than 100 million insurance policies issued since its launch, according to Mehta.
He attributed the startups’ growth to three main factors—a wide range of product offerings, a strong market presence, and partnerships with notable regional e-commerce firms such as Lazada, RedDoorz, and Shopee.
Igloo is already present in some of the region’s fastest-growing economies, like Indonesia, the Philippines, Vietnam, and Thailand. In April, it secured USD 8.2 million in an extended Series A round, bringing its total raised capital to USD 16 million.
Riding on a tailwind amid COVID-19
The company operates a business-to-business-to-consumer (B2B2C) model that has enabled the company to continue growing even amid the pandemic. It collaborates with traditional insurers such as Allianz, FWD, MSIG, Cigna, and Sompo to design specialized products or transform legacy insurance products, helping insurers to underwrite policies with the help of new technologies.
“The underlying attribute of risk that comes with every insurance product is the most important thing that enables us to design products and price them more competitively. Given the fact that products are entirely new, most of the time, our insurance partners seek our help, which is another value-added point for us,” Mehta said.
Igloo also partners with e-commerce sites in the region such as Bukalapak, Shopee, Blibli, and Bhinneka. “Customers can purchase insurance products via these e-commerce platforms. A good mix of products is built in a way to be made available via these platforms’ ecosystems,” Mehta said.
Igloo collaborates with Singapore-based hotel startup RedDoorz as well. Customers can purchase personal accident, liability, and baggage loss insurance on the RedDoorz platform in Vietnam, the Philippines, and Indonesia, provided by Igloo and underwritten by Baoviet, MICI, and Allianz, respectively, Mehta said.
Other offerings, such as phone screen protection insurance, are available directly from the Igloo app, with customized plans starting from USD 3 per month. The customer’s insurance journey is entirely digital. Users only need to take a selfie with their phones in a mirror to apply for the assurance. Igloo uses its machine learning technology to deduce the current state of the device.
“We take into account structured data and unstructured data and come up with the requisite risk profile of the transaction that’s going on, and thereby issue a policy at a price that is in line with the inherent risks that that transaction has. This has actually helped us to keep claim rates at a fairly low level,” Mehta said.
If an insured client ends up cracking the screen, the application will guide them to the nearest service center.
Beyond being an insurtech enabler
With the pandemic decimating conventional face-to-face channels, consumers are choosing to buy their insurance products online, according to a survey conducted by global reinsurance firm SwissRe Group. Over 60% of Southeast Asian consumers have shown a stronger preference to buy insurance products online, while 68% of respondents said they want an end-to-end digitalized product.
Mehta, however, emphasizes that Igloo’s vision lies beyond being a tech-enabler. He wants the firm to be a well-rounded insurance player.
“What we want to do is to expand and go a bit deeper into every country. While we have grown five times this year, in the next two to three years we are going to grow ten times. The tech engine will continue to be our core, but we will buy more assets so as to become a well-rounded insurance player,” he said. “The second thing is to invest in data and technology pedigree, so that we could become the top of the class.”
Igloo is set to close a Series B fundraising round in the first quarter of next year.
This article is part of KrASIA’s “Startup Stories” series, where the writers of KrASIA speak with founders of tech companies in South and Southeast Asia.
