This series is produced in collaboration with the Fintech Association of Malaysia (FAOM), a national platform that supports Malaysia becoming the leading hub for fintech innovation and investment in the region.
While researching for this article, I brought up insurance to friends and acquaintances, only to be, more than once, immediately told they were not interested in buying any packages from me.
In many parts of Asia, where insurance has been traditionally sold through networks of commission-earning agents, it’s treated with some measure of hesitancy and disdain. After all, insurance has been a financial product viewed as opaque and confusing to navigate for the average person for a long time.
Yet insurtech, accelerated by a pandemic that has brought forth the importance of the virtual, has brought about a sea change in attitudes towards insurance.
From 2013 to 2017, overall investment in insurtech startups increased from US$3 billion to US$ 2.2 billion at a CAGR of 69.2 per cent. Incumbent insurers, too, have been getting in on the action.
However, in 2016, according to AICB-PwC Malaysia FinTech Survey, Insurance Cut, 74 per cent of them viewed insurtech as a cause of business loss. In 2022 many of them are investing in, acquiring, or otherwise partnering up with insurtech players.
The Asia Pacific is expected to be the main driver of this growth in the next decade.
Wilson Beh is one of the pioneers at the forefront of the insurtech in Malaysia. Co-Founder of PolicyStreet, an insurtech championing inclusive protection for the digital and gig economy, licensed by the Central Bank of Malaysia and Labuan FSA, and Vice President of the Fintech Association of Malaysia (FAOM), Beh strikes a stark contrast to the image of a typical “insurance guy”.
He is incredibly well structured, laying out his points methodically and calmly. His tone is more akin to that of a detached analyst than that of a peddling sales agent.
Yet, when he brings up how he started in insurance, one can tell that it also comes from a deeply personal place: his voice quivers ever so slightly with emotion.
“I grew up in Nibong Tebal, a small town in Penang. I’ve seen how quickly things can turn bad when a crisis hits and growing up, I saw how family friends and relatives got into huge financial trouble due to unforeseen circumstances. It was clear then, even as a teenager, that insurance could have been a gamechanger.”
Value of insurance
Beh holds no illusions about the value of insurance.
“At the end of the day, insurance is just a fancy piece of paper if it is not triggered. This piece of paper is often so convoluted that many people, even current policyholders, don’t understand the coverage provided. Even if coverage is clear, the claims process is often anxiety-inducing for people, especially in the aftermath of a crisis.”
In insurance, delivery of the product is a marathon, not a sprint.
“I admit, insurance is not the ‘sexiest’ part of fintech. Five years ago, there was a huge push towards payments and wealth management, but insurance was largely viewed as quaint by comparison. The pandemic has changed that.”
Almost overnight, there has been a huge surge of interest in insurtech. Homebound and glued to computer screens, selling and delivering insurance products online became the norm instead of the exception.
“But this is not enough. Insurtech isn’t just about putting things online. It boils down to three goals. Firstly, how can we use technology to make insurance simpler? Secondly, how do we help insurance be more affordable? Thirdly, how do we ensure insurance is relevant to the lives of the people we want to reach?”
Also Read: Bots vs Bodies: can insurers strike a balance between human services and tech?
Building trust
“It goes back to first principles. It’s not just about having a dot com. At the end of the day, the process of getting insured is also about trust-building. That’s why for so long it’s been dominated by friends and family to push sales. What we need to do is to improve on that trust, not by pure association, but by proving true and tangible value to consumers.”
Trust building is all fine and good, but how does one build up such a subjective measure?
“Again, we can break it down into several components. I believe in professional trust-building which means simplicity, consistency, and relevancy.
“Firstly, we should strive to be unbiased, or at least agnostic when comparing products.
“Secondly, we must ensure that the commercial arrangements are fair and proper.
“Finally, and this is where much focus should be paid, we have to ensure that the entire process of getting insured and post-sales support is of top quality and even delightful.”
Achieving financial wellness through insurtech
Beh doesn’t view insurtech as an end-all-be-all, but rather as part of an ecosystem that should accompany a customer’s life journey.
He discusses the 4 stages of financial wellness in life: accumulation, preservation, protection, and distribution, and how he sees insurance as a companion throughout these phases.
To truly reach these goals, however, the insurtech industry still has a long way to go.
“We are still in the beginning phases, and honestly, we can do much more to tackle the needs of the underserved, particularly those from low-income groups. Insurance should not be a luxury, yet that’s how it is seen now.
“Going back to first principles, we have to ask ourselves why isn’t the low-income group getting coverage? Is it not affordable, relevant, or are we taking an ineffective approach?
“People rush to investments (things like buying gold or crypto assets) because they are eager to reap the benefits. So, the issue of insurance is also that the benefits are not very visible, and often not significant enough.
“This is where I believe new pushes in insurtech can be spearheaded. For example, embedded insurance is a new concept that has been popularised by a couple of insurtech unicorns, they underwrite bite-sized, on-demand coverage, which is embedded into large and strategic ecosystems like e-commerce or airlines.
“This is in turn ensures end users are protected meaningfully and relevantly when they practice a certain lifestyle or undergo significant changes in different life stages (think entering the workforce or having a baby).
Also Read: Why the digital ecosystem is key to transforming the insurance industry
“Another example is the mutual aid shared pool concept which is huge in China. While there’s been some pullback lately, I believe this is quite an innovative concept because it gives empowerment back to the insured, back to the members of the scheme.
“The power of peer-to-peer sharing enables participants to not only co-share expenses, leveraging off the power of big data and scalability to bring down the costs, but also onboard hundreds of thousands rapidly.”
The end goal
The holy grail for insurtech, in short, is where insurance becomes part and parcel of our daily life, without the need for lengthy consideration.
“Yes exactly! Hopefully, one day there will be no discussion of whether I should or shouldn’t buy insurance, or what coverage to have, but rather it’s almost a given and a part of life. Ultimately, the right business models are the ones in tune to the customers’ needs and want.”
And what of the outlook in his home ground of Malaysia?
“I believe that we are making positive progress, as you can see from the growing number of strategic partnerships with insurtech and sizable investment in the insurtech industry.
“Earlier this month, FAOM hosted a roundtable discussion on the licensing framework for digital insurers and takaful providers, which was extremely well attended by insurers, startups, and regulators. In fact, Bank Negara Malaysia is still collecting input on the paper and all are welcome to join.”
Why go down the insurance path?
To wrap up the interview, we go back to Wilson’s favourite topic: first principles. I ask him, point-blank: Why insurance? Why not something else in the vast world of fintech?
Wilson’s answer surprises me.
“Leverage.”
Leverage is often thought to be the realm of swashbuckling financiers or more recently Wall St Bets. What does it have to do with insurance, a centuries-old industry all about mitigating risk?
“Here’s the thing. We have the underserved and emerging affluent, from the gig economy, ranging from ride-hailing workers to young professionals, who may not be protected adequately.
“For gig workers, driving every day can be a risky business, and unfortunately, some of them get involved in very serious accidents. This is often a catastrophic incident for not just the driver, but their families which rely on them.
“But think about it. Today, we have insurance products that can be bought for less than a hundred dollars. The pay-out however, can often be 100 times that of the price paid and help the families cover expenses for at least a year or so.
“While the trigger for insurance is never pleasant, it can rescue some families from the brink. I used to be a banker, and so leverage is familiar to me, but in insurtech, here we have some of the most powerful leverage, available at the most affordable prices in the most accessible packages.
“Isn’t that, in its own way, beautiful?”
With many more developments on the way for the insurtech industry, I can’t help but feel excited about a world with a little bit more of this beauty.
Note: The Central Bank of Malaysia welcomes feedback to the discussion paper of the proposed digital insurer and takaful operators. Feedback can be submitted via e-mail to DITF@bnm.gov.my or through the Fintech Association of Malaysia at office@fintechmalaysia.org by 28 Feb 2022
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