Insurance Business Tends to Recover Soon, Momentum for Insurtech
Research shows, Indonesia is to lead insurance premium to the next 2023
Randi Eka - 5 October 2020
Despite many business models in the development of the Indonesian startup ecosystem, technology insurance (insurance technology – insurtech) is one that is currently captured by many local and foreign investors. The main principle, insurtech tries to revolutionize consumer behavior, by presenting a simpler, more transparent, and economical insurance process.
There are several basic reasons why insurtech is projected to rise. As Lifepal stated, citing the results of the Munich Re Economic Research study, Indonesia will support the growth of health and life insurance premiums from 2019-2030, with a CAGR of 9.1%.
Throughout 2019, the premiums that have been successfully booked have reached 185.3 trillion Rupiah for life insurance and 80.1 trillion Rupiah for health insurance.
The Covid-19 pandemic has not declined the growth of the insurance business in Indonesia. From the data summarized by Lifepal, it is shown that there is a relatively fast recovery in relation to gross premium income for life insurance throughout 2020. Especially in June 2020, the value increased compared to the same period last year.
Momentum for Insurtech
Amid the growth of the insurance business, it turns out that if you look deeper, there are many pain points for prospective customers. The process of seeking information, buying, and claiming insurance products is sometimes not easy, and it is also considered less transparent. The conventional business model uses an agency system, an agent will “fully encourage” prospective customers to subscribe to the insurance product, without providing holistic and comprehensive education.
In some cases, these agents created distrust among consumers. Especially in the digital era like today, consumers can easily validate the information submitted. However, even when searching for it on your own, for example through Google, many complex terminology and biased recommendations are encountered, in the end, it does not lead consumers to products that provide optimal benefits.
Based on this fact, several startups appeared to offer easier insurance processing, through the help of technology. The DSResearch report entitled “Insurtech Strategic Innovation” has mapped several local startups operating in this industry.
Lifepal itself is one of the insurtech players that offers customers the convenience of finding and buying the right insurance for their specific needs. It provides content and reviews designed to make it easier for consumers to plan, by presenting lists and comparing insurance products. Currently there are around 50 insurance brands that have been embraced, with 200 product choices; manages to generate approximately 4 million site visits every month.
In 2020, several insurtech startups have strengthened business penetration, including raising new funding. Most recently, PasarPolis announced that it has secured funds of up to 796 billion Rupiah. This value is also supported by the latest round of series B from LeapFrog Investments, SBI Investment, Alpha JWC Ventures, Intudo Ventures, and Xiaomi. This acquisition is claimed to be the largest for insurtech startups in the region.
Last May, Igloo, previously known as Axinan, also announced series A + funding worth 238.4 billion Rupiah. They are a startup from Singapore that already has an operational base in Indonesia through its collaboration with Sompo Indonesia. There is also Qoala, who booked series A funding of 209 billion Rupiah in April 2020.
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Innovations continue to roll, several players have also launched insurtech-based products this year. As is done by People’s Capital, in collaboration with Adira they present vehicle insurance. This initiative was launched simultaneously with the company’s entry into the e-procurement business of purchasing logistics trucks.
There are also artificial intelligence-based innovations launched by Prixa. They integrated the healthtech system with insurtech, engaging several players in related landscapes. The service is presented in the form of a chatbot, with the hope of making it easier for potential customers to gain understanding while chatting with an expert.
Original article is in Indonesian, translated by Kristin Siagian