Yen Ming Lee, Co-founder & CEO of PolicyStreet
PolicyStreet, a full-stack insurtech group of companies with operations in Southeast Asia and Australia, directly works with over 40 life, general, and takaful providers globally to offer a comprehensive range of products and services. Its products and services include embedded insurance, customised employee benefits, financial advisory and aggregation of insurance, as well as the development of digital solutions to make insurance purposeful and simple for businesses and consumers.
Through its regional group of companies, PolicyStreet serves over 5 million customers with over US$6 billion in sum insured.
In 2022, it was named one of the 100 Leading Emerging Giants in the Asia Pacific by KPMG and HSBC. The insurtech company recently raised US$15.3 million in a Series B round of investment led by Khazanah.
In this interview, Co-Founder and CEO, Yen Ming Lee, discusses how PolicyStreet navigated multiple global crises to secure a place in the region’s insurance space.
Excerpts:
How has been the past 2-3 years for PolicyStreet from a business growth perspective? How did it tide over COVID and the economic slowdown?
From a business growth perspective, the past 2-3 years have been transformative for PolicyStreet. Despite the unprecedented challenges, we achieved significant progress and demonstrated resilience during this period.
We realised the importance of adaptation and agility and diversified our product offerings to mitigate the effects of the economic slowdown. As digital and gig economies boomed during the COVID lockdown, we noticed that the backbone of the two economies — gig workers — were underinsured and at risk for financial instability.
Having always upheld a customer-centric approach to serving communities, we developed strategic partnerships while obtaining relevant licences that allowed us to serve this group of underinsured individuals better.
Also Read: PolicyStreet aims to advance embedded insurance in SEA with its US$6M Series A financing
As the economy recovers, we’ve developed an ecosystem of insurtech products and services that complement each other, supporting the growth of the gig and digital economies. Given our resilient business model in prioritising problem solving, we recorded 5x growth and attained a sum insured of over US$6 billion as of FY22.
How does the current global economic slowdown affect your business, and what steps have you taken to mitigate any negative impacts? Have you noticed any changes in customer behaviour or demand, and how have you responded?
In 2019, we received the Financial Adviser and Islamic Financial Adviser approval from Bank Negara Malaysia, which allowed us to work agnostically with 40 insurers and takaful providers in Malaysia.
When the COVID-19 lockdown hit, we had just launched our B2B business, offering customised employee benefits to SMEs by bundling different coverages from insurers and takaful providers to create the best value coverage according to budgeted requirements.
As businesses went into lockdown, we saw that SMEs were cutting costs. Although customised employee benefits helped companies save costs compared to obtaining coverage from individual agents or insurers, insurance was often not the priority for businesses struggling to keep their heads above water.
To ensure our business sustainability, we diversified our products and offerings. In 2021, we were awarded the General Insurance and Reinsurance licence from Labuan Financial Services Authority, enabling us to underwrite our insurance products and expand our product offerings.
Instead of merely targeting underinsured businesses, we launched our B2B2C business by providing embedded insurance to underinsured gig workers through strategic partnerships with p-hailing and e-hailing service providers. We started as a customised employee benefits business and grew to become a comprehensive insurance solutions provider to all stakeholders within the digital and gig economy.
How has your financial strategy changed in light of the current market conditions, and what measures have you taken to ensure long-term sustainability?
Our financial strategy remains the same — to provide customer-centric insurance solutions. We believe narrowing the protection gap by making insurance accessible through optimised problem-solving would ensure our business’s sustainability.
We will continue innovating, deepening and advancing our tech and underwriting capabilities better to serve the underserved and underinsured communities in the region.
Concurrently, we will also monitor market and industry trends and changes to ensure our insurance solutions are relevant and effective, evolving the dynamic needs of individuals and communities.
Can you speak of any recent fundraising efforts and how the current economic climate impacted those efforts?
We’re thankful to have completed an oversubscribed Series B fundraising round recently, with Khazanah, Malaysia’s sovereign wealth fund, as the lead investor.
Our existing investors Altara Ventures, Gobi Partners, and Spiral Ventures also joined the round.
Fundraising is no easy feat for any startup, and we’re thankful for the US$15.3 million (RM 67 million) raised to support our company expansion efforts.
Can you discuss any cost-cutting measures PolicyStreet has implemented and how those measures have impacted your business operations? Did you lay off employees to stay afloat in the market?
Despite challenging times during the COVID-19 lockdown, we did not have to resort to layoffs. We have remained prudent in our spending throughout the years, which helped us remain resilient during the economic slowdown.
Have you adjusted your growth projections or other key performance indicators in light of the current economic climate?
PolicyStreet monitors market conditions and adjusts growth projections and key performance indicators accordingly. As a responsible organisation, we recognise the importance of staying agile and adaptable.
While I can’t disclose specific details, we regularly review and recalibrate projections based on data-driven insights and industry trends. Our ability to adjust strategies allows us to remain resilient and responsive. By monitoring economic indicators, we identify opportunities and mitigate risks.
Also Read: It is costly to develop and sell insurance products in Indonesia: PasarPolis CEO
We strike a balance between prudent expectations and aspirational targets, aiming for sustainable growth while considering the realities of the economic climate. Rest assured, PolicyStreet is committed to navigating the challenges and seizing opportunities as we evolve in the dynamic market landscape.
Can you speak of any market opportunities that have emerged as a result of the economic downturn and how your company is capitalising on those opportunities?
With the insurance penetration in ASEAN lingering around 4 per cent of GDP, lagging behind the global average of 7 per cent of GDP, the market opportunity has always been the protection gap with or without the economic downturn.
It was always a matter of making insurance accessible to these vulnerable individuals and communities and how insurtech startups such as PolicyStreet approaches the problem. Accessibility does not necessarily mean affordability. It can sometimes translate to various approaches ranging from simplifying processes which reduces the administrative workforce needed, to working according to the behaviours of consumers to encourage uptake.
The needs and preferences of the underserved are often ever-changing. We aim to continue monitoring these changes, remaining quick to respond, and developing solutions that make a difference to consumers and businesses.
How do you balance the need for short-term financial stability with the long-term goals of your business?
We strategically toe the line between short-term financial stability and long-term business goals. We emphasise prudent spending and strategic investments to ensure our sustainability on a daily basis.
The key management team at PolicyStreet
Through disciplined financial management, we control costs and optimise operations for immediate stability. Simultaneously, we make strategic investments in technology, talent, and partnerships to drive long-term growth.
We continuously evaluate our performance to make informed decisions and align with our strategic vision. This balanced approach allows us to address immediate risks while capitalising on growth opportunities for a sustainable future.
Can you discuss any plans you have for diversifying your revenue streams or expanding into new markets in light of the current economic climate?
We’re unable to comment on precise future plans to diversify revenue streams.
Nevertheless, with the recent funds raised, we aim to utilise it to:
- Deepen our technology development and underwriting capabilities and further advance on-demand insurance policies
- Improve our market position and expand our reach to serve the underserved and underinsured audience segments better
- Expand our operations regionally.
How have you maintained a strong company culture and kept your team motivated during these challenging times?
At PolicyStreet, we believe that our people are the backbone of the business. While we are selective in our recruitment process and ensure that we have the right people onboard, we also host several culture-building activities, ranging from Halloween costume contests to annual all-you-can-eat buffet dinners.
We also believe in fair compensation and treatment for team members of all levels. We promote extreme ownership and provide opportunities without prejudice. We encourage autonomy for our team to contribute and lead projects according to their capabilities, ultimately allowing them to hone their skills along the way.
Additionally, we constantly remind our team of the significance and impact of their contributions to community growth and financial stability. Being at the forefront of innovation within the insurtech industry, PolicyStreet’s employees feel empowered, knowing that they are making a difference in the lives of millions of people across the region by working to close the protection gap.
Do we see an end to the raise-cash-burn-cash growth model and the emergence of the ‘make profits, sustain & grow’ model?
In the challenging startup scene, where only a handful of startups achieve profitability, we acknowledge the inherent difficulty. However, we remain committed to advancing towards the “make profits and grow” model despite the climate.
We recognise that sustained profitability is crucial for long-term success. By adopting prudent financial management and strategic investments, we strive to continue on our positive growth trajectory.
While the startup landscape poses unique challenges, we aim to navigate them and contribute to the paradigm shift towards sustainable growth and profitability.
What challenges does a late-stage startup face compared to an early-growth-stage startup? What learnings can early or growth-stage companies make from late-stage companies?
As a startup in its early stages, we’re taking a page from the late-stage startup playbook when it comes to scaling operations, increased market competition, and investor expectations.
We observe how late-stage startups handle scaling challenges, plan our future scalability, optimise processes and allocate resources efficiently.
Also Read: PasarPolis: selling insurance in a country that considered purchasing insurance a ‘loss’
We’re also consistently monitoring late-stage startups’ market positioning and differentiation strategies, ensuring we carve out a unique value proposition and adapt to evolving customer needs. PolicyStreet also embodies the financial discipline demonstrated by late-stage startups, prioritising growth and establishing solid financial management principles early on.
By embracing a learning mindset and adapting strategies, we navigate challenges and position ourselves for long-term success.
How is the mindset and cultural shift happening internally, since we are in a high-interest rate environment and funding isn’t going to be as easy as before?
Internally, we at PolicyStreet remain cautiously optimistic in response to the challenges posed by the current high-interest rate environment.
We have always embraced a culture of financial prudence, carefully evaluating expenditures and prioritising investments with clear returns and will continue to uphold this as our standard practice.
Strategic decision-making and resource optimisation are also paramount, as we conduct thorough analyses, risk assessments, and scenario planning to align our strategies with market conditions while also leveraging technology to improve our offerings.
We maintain a learning mindset, staying informed about market trends and adapting our strategies accordingly. Through these efforts, we aim to navigate the high-interest rate environment and ensure long-term success and sustainability.
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