Igloo Co-Founder and CEO Raunak Mehta
Despite an increased awareness post-pandemic, insurance penetration rates across Southeast Asia remain low due to affordability and accessibility. The rate is a meagre 1.2 per cent to 3.4 per cent of gross domestic product (GDP). Insurtech companies like Igloo attempt to change this situation by introducing innovative insurance products covering underserved communities.
Igloo, based in Singapore, has already introduced several unique insurance products in Vietnam, Indonesia, and the Philippines. With an eye on new markets, the company recently secured US$27 million in a new funding tranche to close its Series B round at US$46 million. The money came from Germany’s InsuResilience Investment Fund II, WAM, Finnfund, La Maison, and Cathay Innovation.
In this interview, Igloo Co-Founder and CEO Raunak Mehta shares insights into the region’s insurtech industry and talks about the company’s products, growth, expansion and IPO plans.
Excerpts:
What is the synergy between Igloo and InsuResilience Investment Fund II? How does its participation mutually benefit? Does this indicate Igloo’s interest in entering the German market?
Igloo uses technology to make insurance more affordable and accessible to underserved communities in Southeast Asia. At the same time, the InsuResilience Investment Fund II supports technologies that drive affordability and accessibility to climate insurance.
Igloo has the expertise and capabilities to develop insurance products and solutions directly impacting our investors’ target communities, such as Weather Index Insurance. We also share their mission to build a sustainable future and contribute toward realising the United Nations’ Sustainable Development Goals (SDGs).
While Igloo does not have plans to enter the German market, our recent funding round shows that investors outside Southeast Asia are paying attention to the impactful work we do to advance financial inclusion through insurance protection and focus on impact and social good.
How did Igloo manage to raise additional funds amidst a looming recession?
Despite the economic slowdown brought about by the COVID-19 pandemic, we continued to seek partnerships with local and regional insurance companies and digital platforms to facilitate new insurance products and solutions.
We drew investors’ attention with more than 300 million policies and a gross written premium (GWP) that has grown 15x since 2019.
Since our inception, we have facilitated more than 100 million policies targeted towards climate change, low to mid-income populations and the gig economy.
You said in a statement that Igloo is in the process of identifying and closing on various M&A opportunities. Have you identified any companies yet? When can we expect to close your first M&A deal?
We are evaluating multiple opportunities across SEA. The focus is on vertical integration to enhance our expertise and value proposition.
We are looking at closing multiple deals over the next year.
Is the insurtech industry ripe for consolidation?
Over the last two years, we saw an increase in demand for insurtech products and services, resulting in a significant growth of new entrants focusing on specific verticals, business lines, and distribution channels.
With the insurtech industry maturing, we might expect fewer startups to emerge. Still, we foresee early entrants and established players continuing to grow as they utilise their learning and experience to innovate and build strategic partnerships with the right players to strengthen their positioning.
You operate in Singapore, Thailand, Vietnam, and the Philippines. Do you follow the same strategies in all these markets? Do you plan to introduce any new specific products to these markets?
We conceptualise our product offering through a combination of market research and inherent demand from our digital distribution partners. After this, we identify common pain points in each market to find opportunities to scale these products outside of their origin to drive our inclusive insurance agenda in the region.
An example is our recently launched blockchain-based Weather Index Insurance in Vietnam. We see a massive potential for this product. So we plan to expand this insurance solution to cover more agricultural commodities and take it to other parts of Southeast Asia shortly.
Where do the Indonesia, Vietnam and Philippine markets stand regarding the growth of insurtech? What local trends do you see in each market?
Although COVID-19 has increased awareness, insurance penetration rates across the region remain low due to affordability and accessibility.
For instance, the life insurance penetration rate is approximately 1.2 per cent to 3.4 per cent of gross domestic product (GDP), with more than 70 per cent of the working population employed in small to medium-sized enterprises (SMEs) that do not grant proper insurance coverage.
This triggered insurtech companies like us to use our technology to develop more insurance products and solutions that could improve insurance penetration rates in our key markets.
Across the markets, we see growth areas we can support with insurance products and solutions. The positive results from Ignite (the blockchain-based Weather Index Insurance) in Vietnam and Indonesia led us to the Philippines, where most of the population relies on insurance agents and traditional insurance companies.
We also see a demand for protection plans geared towards protecting the Philippines’ gig economy, seeing the uptick of contractual workers in the market.
Do you have plans to introduce more niche insurance products in the region?
In the Philippines, we introduced pet insurance protection with the rise of pet ownership during the pandemic.
With its massive gaming community in Indonesia, we brought Gamer’s Insurance to the market.
We plan to bring Weather Index Insurance to more SEA countries, covering different crops and adverse weather events like typhoons or earthquakes.
Are you profitable already?
We are making a better-than-expected movement towards profitability on the back of higher revenue extraction and economies of scale effect on our cost base. Ceteris Paribus, especially with respect to macro variables, we should be able to turn cash flow positive over the next couple of years.
What are your exit plans? Is an IPO plan in the offing?
Our journey has just begun, and with the growth that we have delivered over the last three years with continuous improvement in our margins, we believe we have taken baby steps towards our vision of “insurance for all”.
A strategic sale or IPO may be possible over the next three to five years, contingent on prevailing economic conditions.
Can you share insights into the overall global insurtech industry? Do you foresee tech like AI and blockchain disrupting the sector?
Globally, we see strong demand for insurtech services. As economies recover from the COVID-19 pandemic, we will see more solid demand for new insurance products and solutions to help make insurance more affordable and accessible for underserved segments.
Also Read: Women in Tech: Female leaders shaking up insurtech in Asia
In countries like Vietnam, Indonesia, and the Philippines, we see the demand from insurance agents who would benefit from digital solutions that help them serve customers better. In other markets like the Philippines, we already see a demand for more personal insurance products like Pet Insurance.
As the shift towards the digitisation of the industry is imminent, this also presents opportunities to utilise and integrate new technologies into insurance products and solutions. In light of our recently launched Weather Index Insurance, we can also see blockchain integration disrupting the industry. Through smart contracts, insurance payouts could essentially be triggered for multiple types of coverage.
Index Insurance may be the start, but this could eventually make more traditional forms of insurance, such as personal accident or car insurance, more affordable and accessible.
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