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Singapore - a hotbed for InsurTechs?

Source: Asia Insurance Review | Jun 2019

We speak to a range of Singapore-headquartered InsurTechs to establish where the hot spots are. 
By Ranamita Chakraborty
Considered as one of the best places in the world for tech start-ups to launch and grow their businesses, Singapore has welcomed many InsurTech players who seek to innovate and collaborate with the insurance industry. Currently, the InsurTech scene in Singapore can be best described as booming yet saturated and competitive. 
InsurTech refers to the application of technology for the insurance industry which is designed to bring about more savings and efficiency from the current industry model. Generally, InsurTechs leverage either AI or machine learning, blockchain technology and IoT.
”FinTech has significantly changed financial services in general but even in there the traction has been comparatively slow. InsurTech is very much further behind FinTech,” said Inszure CEO Steve Tunstall who has been involved in InsurTech for three to four years now, starting from the basics when InsurTech first took off.
Mr Tunstall’s Inzsure seeks to transform the commercial insurance experience for SME customers in Singapore by providing an end to end service and a reduction of frictional costs via its digital platform.
From his interactions with various people, Axinan founder and CEO Wei Zhu who had no prior professional experience in insurance before he founded his start-up, saw that people usually view the insurance industry as a dinosaur still using outdated technologies. 
Formerly a CTO at Grab and software engineer at Microsoft and Facebook, Mr Zhu is a technology expert drawing lessons from the ride-hailing growth story and applying it to insurance. He sees technology and software as a major driver for innovation in traditional industries like insurance.
“Innovation in the InsurTech space is not going to be as easy as transport. It will take patience and really a lot of hard work,” said Mr Zhu.
Founded in 2016, Axinan graduated from Singapore’s PayPal Innovation Lab in the same year. Employing big data, actuarial risk management and machine-learning processes, it creates products that are integrated into online marketplaces and platforms. 
How does Singapore’s InsurTech scene fare compared elsewhere?
A recent McKinsey report has observed three major trends – diversification, professionalisation, and collaboration – which underscore how the InsurTech space has developed and matured over time. Such trends are well-exemplified in the InsurTech scheme in Singapore as well.
However, Mr Tunstall said, “Most of the activity that I’ve seen in Singapore so far has been all around sales and marketing and noise than actual substantive change. That’s just part of the nature of working in a heavily regulated (insurance) industry – an industry that has been around for a very long time literally hundreds of years in the case of some of the companies that I am working with.”
For PolicyPal founder and CEO Val Yap, the evolution of the insurance sector was most prominently observed in 2018 with digital disruptions in the traditional financial services sector creating opportunities for InsurTech firms and insurers to revamp business models. She notes a “pressing need to integrate transformative technologies like blockchain technology into existing operations.”
“The InsurTech scene in Singapore is different from other Asian markets in a good way as the government provides start-ups with various forms of support, such as the MAS Fintech regulatory sandbox, various grants, as well as programmes for employees to upskill themselves,” said Ms Yap.
PolicyPal leverages blockchain technology built by PAL Network to work with insurance partners in the Southeast Asia region. Another InsurTech offering an ecosystem of blockchain-based insurance is Inmediate, which is said to have been one of the first InsurTechs to be launched in Singapore.
Inmediate CEO Otbert de Jong feels Singapore has not scratched the surface when it comes to opportunities in InsurTech. 
He said, “I think there is a fantastic opportunity for Singapore to continue to be the centre of excellence and to be the hub for the region. At the moment, insurance is still very much a local business but it may very well be that that local aspect is going to be de-emphasised in the future. So then, I think being able to play that role as a centre of excellence becomes even more relevant.”
For Mr Zhu, he chose to set up his start-up in this island state as “Singapore is a great place to hire people. We are a technology company so hiring is the most important thing to us.”
Commenting on the InsurTech scene in Singapore, Symbo head of international and Singapore CEO Laurens Koppelaar said, “It is an evolving space within the insurance industry. Six months ago versus now, the industry has evolved and continues to evolve. Particularly in Singapore, there is a lot of ideation and activity happening, some of which aims to be redeployed across the region.” 
Symbo is a Singapore-based regional all lines insurance business with a digital insurance platform. Powered by in-house technology, it distributes products digitally and co-creates new and existing insurance products in collaboration with its insurance partners. 
While the local market is small compared to a lot of the larger nations across the region, Mr Koppelaar values the sophistication and willingness to test and learn within the Singapore market. 
“As a result of that, there’s a lot of experimentation and you have this kind of sandbox environment where people try things to see what sticks or see what works and try to redeploy it in other parts of the region,” he said.
However, Mr de Jong feels that the downside to this is a higher risk of failure since the Singapore market is very small and there is little room for error. 
Where insurtechs see the gaps today
“Gone are the days where people buy large, multi-year policies at thousands of dollars with an agent who gets a fat commission,” said Gigacover co-founder Amerson Lin.
Noticing a protection gap in the gig economy, Gigacover offers insurance products for freelancers protecting them against the loss of income when they are unable to work due to illness and injury. Based on the “Netflix/Spotify subscriber model”, the products are sold at a weekly, monthly or a yearly basis. Gigacover recently partnered GoJek to launch an earnings protection insurance scheme for the latter’s drivers.
Referring to his target audience, Mr Lin said, “These can be tutors, content writers, bloggers, freelance consultants and designers. They all face the same problem. They have different income levels, different kinds of risk and different propensity to pay. But we wanted to serve them all.”
Meanwhile, Mr Koppelaar observed a gap in the commercial insurance space particularly from SME enterprises that are currently underserved and unserved. 
“From a unit economics perspective, these organisationsoften don’t receive the attention that they would need or deserve,” he said.
He also noticed a very big opportunity for innovation in the reinsurance space with Singapore having established itself globally as one of the pre-eminent reinsurance hubs. 
While InsurTech globally has traditionally very much looked at primary insurance as opposed to reinsurance, Symbo is seeking to capitalise on reinsurance opportunities in Singapore. 
“The reinsurance industry does face some significant challenges; some of which can be (partially) addressed through the use of technology. And so I think that’s where there is a very big opportunity for innovation in the reinsurance space to happen in Singapore,” said Mr Koppelaar.
Symbo is currently enhancing its ReConnect platform, a reinsurance digital platform, which has been brought in-house after Symbo acquired ReLeague, a business-to-business reinsurance software platform. The platform seeks to address the inefficiencies in the reinsurance industry, and the company is looking to launch its enhanced version in the third quarter of this year.
Mr Koppelaar said, “Having our in-house technology stack and a license as (re)insurance broker allows us to operate across the value chain of insurance and reinsurance in particular. There are not many InsurTech players out there that are able to operate across the insurance value chain spectrum from an insured to a reinsurer.”
Experience dealing with regulator
To encourage more FinTech experimentation so that promising innovations can be tested in the market and have a chance for wider adoption in Singapore and abroad, the Monetary Authority of Singapore (MAS) launched a FinTech regulatory sandbox in 2016. The sandbox hosted PolicyPal in March 2017, and is currently hosting fellow InsurTech Inzsure till October this year.
Policypal was the first start-up to graduate from the MAS FinTech regulatory sandbox two years ago, which provided it a good head start compared to other start-ups, according to founder and CEO Val Yap.
She said, “In my experience, the sandbox is for insurance companies and regulators to assess start-ups like ourselves. Our experience in the sandbox allowed us to test and seek advice from MAS before expanding. The sandbox was useful for us as a growing start-up to try out as a digital broker and test our business model.”
Having spent the past three years in the local InsurTech scene, Ms Yap advised InsurTech start-ups looking to enter the sandbox to have an open mind and not to be afraid of testing new ideas as the the purpose of being in the sandbox is to experiment. 
“The journey in the sandbox is a good opportunity to test your business model to ensure that you meet regulatory requirements. It is important to be receptive – be it in feedback or to new ideas and technology. It is important to keep up with trends and be willing to explore, otherwise, a business will stagnate and potentially lose out on market share,” said Ms Yap.
Commenting on how the sandbox has benefitted Inzsure so far, Mr Tunstall said, “Well the most important thing is that we are a bootstrapped start up so we don’t have the massive funding and needed some relaxation on a temporary basis for some of the regulatory requirements in Singapore. The MAS have been very helpful in helping us navigate that process and get going here.”
After being incorporated in Singapore less than two years ago, Symbo applied for a fresh brokerage licence which was a close collaboration and working relationship with the Singapore market. 
“It was a relatively straightforward process in the sense that the project is well-documented and I think that it was a good timing for us having had traction in other markets (India) and where the platform has been established. We were bringing over something to Singapore which I believe they welcomed very much,” said Mr Koppelaar.
However, the regulatory process was not smooth-sailing for everyone in the industry. It took Inmediate around one and a half years to acquire a broker license during a time where there was no regulatory sandbox.
Describing the process to be challenging, Mr de Jong said, “Things have improved significantly. We have been a kind of trailblazer which is not always a very thankful role.” He feels Inmediate was fairly ahead of its time but now appreciates the progress made whereby the regulator has embraced new technologies.
Should InsurTechs compete or collaborate with incumbents?
All of the InsurTechs in the sample instantaneously agreed that InsurTechs should collaborate more and compete on a case-by-case basis.
For Ms Yap, having both collaboration and competition is “the ideal situation”. While collaboration “allows mutual benefit, be it sharing technology or promoting brands on their own native platforms”, healthy competition drives innovation allowing both parties to think out of the box to gain an edge over the others.
Meanwhile, Mr Koppelaar said, “We believe in collaboration – our position as a digital platform is very much catered to that. The issues that we face and the challenges in the industry can be very large. I don’t have the belief that any particular organisation or company can address those by themselves. That’s also a reason why for example in Singapore we are now collaborating with about 20 insurance companies.”
Mr Zhu mentioned that collaboration is essential as most InsurTech companies at the early-stage are unlikely to have their own insurance license and therefore need to partner incumbents for underwriting.
Holding a fairly rational view, Mr Tunstall said, “If you look at it generally, I don’t know any InsurTech that’s really totally changing the face of insurance in doing things so differently that it is competing with the whole industry. I would say almost every InsurTech is collaborating with incumbents either in part or in whole.”
“However, where InsurTechs do have an advantage is that they can take a shortcut or do away with some of the unnecessary complexity that some parts of the insurance industry have,” he said. A 
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