Can Singapore’s insurtech Igloo bring hope to the underinsured in Southeast Asia?

For many, the word “insurance” comes with the feeling of security that they or their assets are protected — except, of course, for the underinsured.

In developed nations, possessing insurance is as ubiquitous as vehicles on the road. However, for many in developing nations, it’s something that’s somewhat available, but not quite accessible.

Asia, in particular, has one of the highest levels of underinsurance in the world. It’s such a huge problem that the insurance gap is estimated to be around US$ 134 billion, according to a 2018 Lloyd’s report on underinsurance. 

The issue with large insurance gaps like these is that it places both the public and private sectors under pressure to provide recovery aid when natural calamities befall populations. This, in turn, can pose a huge burden to economies, especially developing ones, to recover economically.

Underinsurance an issue in SEA

Over in Southeast Asia (SEA), underinsurance is not only high but also further affected by the impact of the Covid-19 pandemic. 

However, there exists a silver lining, in that digitalization trends are rapidly emerging here. Bolstered by rising consumer demand for e-commerce, these work in tandem to open the doors for digital players to come in and close this gap.

In an email interview with Singapore-based insurtech startup Igloo, Tech Wire Asia spoke with their Chief Commercial Officer Raunak Mehta on how they’re using technology to close the insurance gap in the SEA markets they serve.

Underinsurance driving two interesting trends 

According to Mehta, they’ve noticed the rapid digitalization of the region and found that increased access to e-commerce products has actually helped increase insurance take-up. 

Secondly, there is a shift towards microinsurance, which serves lower-income populations. It is attractive to the underinsured as they come with low premium products, but of course, with limited coverage. 

You can think of them as a kind of no frills insurance product that protects what’s essential – with low premiums, it makes them affordable and accessible to many more consumers in SEA. 

Microinsurance providers such as Igloo leverage technologies like risk assessment engines and digitized claims management to reduce costs and help the company develop products for specific lifestyle risks. Product examples include transit loss of online purchases, cyber threats, or loss of incomes due to events such as Covid-19.  

“Not only does microinsurance address the pain points faced by consumers in their everyday lives, but it is also more affordable than traditional insurance offerings, providing coverage to lower-income people with little to no savings. 

“It is relevant to up to 80% in some countries, making it impossible to ignore in an emerging economy. With technology, digitally-driven microinsurance also helps people to have better access to insurance products,” Mehta says.

Protecting frontliners, as well as merchants

As the pandemic pushed users to rely on digital services, Igloo noticed an increasing reliance by customers on food delivery services and online groceries. 

Where others saw increased e-retail opportunities, Igloo saw an insurance gap-filling opportunity. This was the perfect time to develop products for the protection of these underinsured, frontline delivery and gig workers.

“In September last year, we partnered with Foodpanda Thailand to introduce PandaCare, a protection program that protects delivery riders during the height of the pandemic where there is a surge in demand for food deliveries. 

“It covers COVID-19, motor insurance, personal accident, and daily hospitalization income protection products, helping delivery riders to go about their daily work in a safe manner,” shares Mehta.

But protecting frontliners with insurance wasn’t the only opportunity available, however. Igloo identified a market for insuring e-commerce merchants and shoppers as well. 

Mehta shared that their most popular product is transit insurance, a B2B2C product that protects merchants and consumers against lost or damaged items during transit.

Their transit insurance premiums are dynamic and charged based on Igloo’s risk assessment engine of customers and sellers. 

Powered by big data, real-time risk management, and digitized claims management, this method of issuing pricing allows for more accurate and personalized premiums.

Not quite the underinsured market, but… 

As plenty in SEA are forced or choose to work from home, many start finding that their previous heavy investments in personal transport might not be paying off too well. 

Although drivers cannot maximize their use of their personal vehicles, they are still required to pay expensive and yearly motor insurance premiums. To address that issue, Igloo launched a usage-based motor insurance product that offers lower premiums, with the caveat of higher deductibles for safer drivers. While not exactly a product for the underinsured, it can help alleviate the burden of motorists, especially when the pandemic has hit many a wallet hard.

How it works is that the plug-and-play telematics-based solution taps on big data to analyze driving behavior and vehicle usage to determine insurance premiums and reward safe drivers, allowing them to save up to 40% in premiums. The parameters used to calculate the premiums include speed, distance, duration of driving, time of driving, and driving area. 

Enterprises benefit too

Since Igloo came onto the scene in 2016, they have racked up a respectable list of collaborations, with a presence across several markets including Indonesia, the Philippines, Thailand, and Vietnam. 

Providing B2B2C services, they have experience in addressing insurance pain points across sectors such as telecommunications, e-commerce, travel, and financial services.

Some of the companies they’ve worked with include Allianz, MSIG, Shopee, Foodpanda Thailand, Bukalapak, Union Bank of the Philippines, MobiFone, and Loship, among others.

Their latest launch was for travel microinsurance product Assured Stay, created in partnership with RedDoorz in Indonesia. It protects the bookings of guests in the event their rooms are unavailable upon check-in; if it was not what was promised, or any other unexpected conditions resulting in trip cancellation.

“We hope to tap into an increasingly tech-savvy demographic in Southeast Asia by offering our full-stack technology, working with partners to make insurance more accessible, convenient, and affordable for consumers.”

– Raunak Mehta, CCO, Igloo

Over the next six months, Igloo aims to double its team and focus on scaling and consolidating its country, engineering, and insurance teams. 

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