Indonesia’s InsurTechs aim to make a difference
A low insurance penetration rate, lack of awareness on insurance and a growing digital economy have given more impetus for InsurTechs to succeed in Indonesia. We spoke to PasarPolis, Quola and Bindcover – InsurTechs which are at different stages of development – to learn about their vision for success in insurance.
By Ranamita Chakraborty
Currently, only 1.7% of around 265m Indonesians are said to have some form of insurance according to the Indonesian Insurance Council. The low figure is attributed mainly to a lack of awareness regarding the benefits of insurance.
This is where InsurTechs step in as they tackle the task of driving insurance penetration through technology, exemplified by the successes of well-known e-commerce and ride-hailing giants.
“We believe that in every basket of product in the digital economy, insurance will be part of it. It is predicted that 3% of the digital economy will comprise InsurTechs,” said PasarPolis CEO Cleosent Randing.
According to him, the Indonesian digital economy is worth $27bn and is projected to reach $100bn by 2025.
Innovation at its core
Looking to tackle common risks faced by locals, InsurTechs in Indonesia have come up with an interesting array of innovative products. For instance, PasarPolis and Qoala both offer flight delay insurance products as the nation’s capital Jakarta is the most delay-prone major airport globally, according to flight data sources.
Typically, 70% of the InsurTech’s flight delay claims payments is disbursed within three minutes – unlike traditional claims which can take approximately two weeks’ to be processed.
Fellow industry player Qoala also provides customised insurance products covering hotel quality checks, e-commerce logistics, cancelled movie tickets and phone screen damages – all sold through a wide network of insurance partners.
“There are many instances where customers purchase insurance as an afterthought or secondary purchase while shopping on e-commerce platforms. At the end of the day, this will lead to more awareness on insurance and overall will drive people to make insurance a part of their lives in the future. That is the most important thing that is required for the insurance industry to move forward,” said Qoala founder and CEO Harshet Lunani.
Meanwhile, Bindcover aims to develop a new type of underwriting methodology with its ‘Crowd Underwriting’ product, which will enable commercial insurance brokers or even direct insurance customers to market their ‘risks’ on Bindcover for (re)insurance companies to bid and underwrite part or all of the risks. With this, Bindcover seeks to be the “Lloyds market in the digital world”, said its CEO Victor Roy.
Paving the road ahead for InsurTechs
Most InsurTechs in Indonesia are web aggregators comparing prices of insurance, but not really adding anything as regulators set the tariff for property and motor vehicle Insurance. However, some of them do product slicing such as turning travel insurance into travel delay insurance and moveable insurance into screen protector insurance, said Mr Roy.
He believes that Indonesia will have more innovative products to come in the near future.
Commenting on the progress of insurtech, he said, “By the end of 2019, for example, most e-commerce platforms, online travel agencies, ride-hailing companies would have all done one or two insurance products. That is the sort of baseline on which to build on for 2020 and 2021 because this year, everyone is experimenting, just dipping their toes in. You will also see other industries emerging in this space who have never done insurance before.
As usual, the larger players influence the market and then the smaller players react and those are vital if the entire market behaviour were to change,”
At the same time, he sees that major technology companies in the country are starting to adopt and sell insurance as an add-on product for their customers, and this is where InsurTech firms can leverage on the opportunities.