Friday, 2024 June 14

Insurtech firm Igloo’s chief commercial officer on making insurance affordable through digitalization

This article was originally published on Oasis.

Like many industries, the insurance sector was streamlined by changes brought on by the digital age, taking its products and services to a wider audience. One example of this transformation can be seen in the rise of companies like Igloo, a Singapore-based full-stack insurtech firm that enables smart, digital insurance.

Raunak Mehta is the chief commercial officer of Igloo. He oversees various aspects of the company, including business development, marketing, operations, insurance partnerships, and fundraising. Right now, Mehta is focusing on expanding Igloo’s footprint in various markets throughout Southeast Asia while addressing the challenges in the post-pandemic era.

“When you have an operation like ours with a presence across so many countries, it’s up to me to ensure that the work is getting prioritized correctly, and that we are using our resources in the most efficient manner possible in order to not overwhelm the system,” he said to Oasis in a recent interview.

Apart from that, Mehta also shared with us the state of underinsurance in the region, and his vision for the industry in the future.

This interview has been edited and consolidated for clarity and brevity.

Oasis (OS): Can you elaborate on the demand for microinsurance, especially in Southeast Asia?

Raunak Mehta (RM): Overall, the health insurance market in Southeast Asia is worth roughly USD 80 billion to 85 billion. The overall penetration of Southeast Asia is around 1.6%. For countries like Singapore, this metric can be 1.5% to 2%. However, in Indonesia or the Philippines, the rate sits between 1% and 1.5%.

The lackluster rates in these countries are likely due to lower public awareness of insurance in these countries. In this regard, we can introduce “entry point” products to raise interest and encourage their acceptance, which is where microinsurance comes in.

So, the idea is to sell insurance as cheaply and efficiently as possible to the end consumer. That is why we decided to employ digital means to facilitate purchasing and post-sales support, including policy and claims management. By making it fully digital, we can also build it at scale.

Ever since we began offering microinsurance two years ago, we have seen very favorable results come out of it, especially in the Philippines, Indonesia, and Vietnam.

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OS: How can providers introduce insurance to places with low penetration rates?

RM: The easiest way to drive adoption of a certain product or service is to lower the entry barriers, which is generally related to pricing, awareness, and education. That is where microinsurance comes in handy. By making it affordable to people, you are able to discover new ways of selling. Southeast Asia is one of the top regions in the world when it comes to the amount of time people spend on social media, and a large part of it is driven by a very high degree of smartphone coverage.

OS: With people gradually becoming more aware of the importance of public health due to the COVID-19 pandemic, are there any significant numbers you can share regarding a possible change in insurance usage?

RM: Compared to 2020, Indonesia, Vietnam, and the Philippines have both seen a jump in insurance premiums in the first half of 2021.

According to one report, insurers racked up close to USD 50 billion in losses in 2020 as insurance premiums suffered. Whenever incomes get hit, insurance quickly becomes non-essential. People tend to cut down on this kind of expense in such situations.

In the Philippines, interestingly, the average premium per policy has gone up, which is a very good sign. People are starting to invest more in health-related products, which is also reflected in how our portfolio is shaped, where a large part of the business comes from the health and accident segments.

OS: How do you sell insurance to people who cannot afford conventional policies?

RM: Let me give you an example in Indonesia. We sell a personal accident product that provides monthly coverage at a very low price.

If you look at the low- and middle-income segments, especially in countries like Indonesia and the Philippines, you will find that a good section of the population moves below the poverty line as a result of health-related expenses. When people who don’t have insurance find themselves hospitalized, their family or loved ones would need to find ways to finance the expenses. It is in cases like this where microinsurance really comes in handy.

When designing microinsurance products, we take into account the basic need, or basic expense, that would result from an insurable event. For instance, an accident would likely result in hospitalization. We consider how much a basic ward in a hospital in Indonesia would cost on a daily basis, the number of days the claimant may spend there, and the other things that they might want to be covered. It’s more of a bottom-up approach, rather than having an all-in-one product that tries to offer lots of features but ends up giving nothing at all.

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OS: What are the biggest challenges in pushing for higher insurance adoption in the Southeast Asian region? How do you tackle them?

RM: Consumer education is definitely one important point. The first thing we need to do is make insurance easy for people to learn about. One of the quirks of this industry, or the financial services sector as a whole, is that it plays up the negative consequences of not buying these products. We have to shift this need-based mechanism to want-based. Insurance should be made understandable to the average person, and it can be done. All we need to do is to communicate with common sense.

Secondly, according to our research, education should be provided via digital channels, which means we need to have the right content for these platforms and render them to our target audience.

Finally, from a business standpoint, people usually want to buy certain products or services if they are affordable and address issues that they care a lot about. If your product doesn’t cover the things that they think are important, there would be a mismatch of expectations.

OS: From your perspective, what’s in store for the insurtech industry in the next five years?

RM: There are two types of insurtech companies. There are those like us that facilitate the selling of insurance products, and there are firms that specialize in providing back office support.

Today, a large segment of the insurance is being sold by agents and brokers, which is great because the people who are selling insurance are also making a living from it. But are we providing them with the right tools and techniques to sell the right insurance products to a wider section of society? Maybe not.

That’s why I think everything has to come together for insurance to become a commodity. There is so much risk when you’re carrying out your daily errands, but if you have coverage to mitigate it, you can introduce a higher degree of consistency to your life, your finances, and your well being.

Oasis, the brainchild of KrASIA, aims to provide a haven for human-centered stories on Asia’s leaders. Click here to read similar stories. 


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