PasarPolis Founder and CEO Cleosent Randing
Southeast Asia’s insurance penetration is approximately 1.2-3.4 per cent of the GDP across the different countries (barring Singapore). Low insurance literacy level is one reason for this sluggish growth.
“Many people in the region aren’t aware of the importance of insurance and may have misconceptions about the industry,” said Cleosent Randing, Founder and CEO of PasarPolis, a leading insurtech startup in Indonesia. “Another challenge is the cost and complexity of traditional insurance products, which can deter potential customers.”
“PasarPolis is working to address these challenges by educating consumers about insurance benefits, simplicity and affordability. Through this education, we hope to increase insurance penetration in the region and make it more accessible to a broader audience,” he added.
Founded in 2015, PasarPolis aims to provide easy and affordable access to insurance products using innovative technology and provide a smooth user experience from purchase to claims.
The company has over 60,000 registered agents and works with over 50 insurance partners and 40 leading ecosystem partners to serve over 80 million customers and issue over one billion policies between 2019 to 2021.
According to the firm, it allows people to purchase micro-insurance products with a tap. They can add insurance to their purchases from the ecosystem partners like Shopee, Tokopedia, Gojek, and Xiaomi.
The cost of these micro-insurance products is often less than a cup of coffee (at around 5,000 to 20,000 Indonesian rupiah). Filing claims is also easy, as consumers can fill out a simple form via SMS/Whatsapp to process their claims.
About 40 per cent of PasarPolis customers are workers in the informal sector, including taxi drivers, couriers, and online MSMEs.
Besides Indonesia, the insurtech firm also has a presence in Vietnam and Thailand.
To date, the company has raised over US$59 million in investments from Gojek, Tokopedia, and Traveloka.
PasarPolis has just announced that it has become a full-stack insurtech ecosystem. This development comes after Tap Insurance, a company with shared shareholders as PasarPolis, received a full license from the Financial Services Authority of Indonesia (OJK) to operate as an insurance underwriter. This license allows it to distribute and underwrite its own digital insurance products, freeing it from traditional underwriting processes.
“This development will allow us to offer its customers more tailored and customised insurance options and streamline the underwriting process, potentially leading to more efficient and cost-effective insurance products,” according to the CEO.
Randing pointed out that Indonesia’s insurance market is facing several challenges. One, it is costly to develop and sell insurance products. “Underwriters often take high margins when creating insurance products, and there are layers of brokers and agents who also take a cut when distributing the products. This makes insurance products expensive for consumers.”
Additionally, it is hard for consumers to access insurance products, as they often have to communicate with agents to purchase them. There was previously no way to buy micro-insurance products online 24/7 in Indonesia.
Another issue is that the insurance industry has a negative reputation when it comes to processing claims, as it can be a bureaucratic and lengthy process with a lot of paperwork involved.
“We allow consumers to easily purchase micro-insurance products with a tap as they can add insurance to their purchases from the ecosystem partners like Shopee, Tokopedia, Gojek, and Xiaomi. The cost of these micro-insurance products is often less than a cup of coffee (at around 5,000 to 20,000 Indonesian rupiah). Filing claims is also easy, as consumers can fill out a simple form via SMS/Whatsapp to process their claims,” he said.
Insurance penetration in emerging economies in SEA
Indonesia: The gross written premium for the general insurance industry was IDR71.36 trillion (US$4.9 billion) in 2021. The market is expected to grow at a CAGR of more than 7 per cent during 2020-25 (GlobalData). The insurance penetration rate is 3.18 per cent as of 2022.
Vietnam: The general insurance industry is projected to grow at a compound annual growth rate (CAGR) of 8.5 per cent from VND60.15 trillion (US$2.6 billion) in 2021 to VND90.24 trillion (US$3.5 billion) in 2026 (GlobalData). The penetration rate is less than 3 per cent.
Thailand: The insurance industry is expected to grow at a compound annual growth rate (CAGR) of 4.7 per cent from THB890.4 billion (US$27.8 billion) in 2021 to THB1,1129.3 billion (US$36.1 billion) in 2026. The insurance penetration rate is 5.5 per cent (GlobalData).
In comparison, markets like Hong Kong (20.8 per cent), Taiwan (17.4 per cent), and South Korea (11.6 per cent) have a 3-6x higher penetration (Swiss Re).
Also Read: PasarPolis raises US$5M from World Bank’s International Finance Corporation to democratise insurance
“A low insurance penetration rate means big market growth potential,” he shared. “But two things are crucial to boosting the growth to double digits. One, focus on new and innovative products delivered at speed through cutting-edge technology and a deep focus on building customers’ trust to give them a more seamless insurance journey. Two, a 10x better insurance purchase and claims experience by helping customers achieve financial security at every life stage and market,” he maintained.
“We have identified that the greatest opportunities lie in new insurable risks or utilising technology to insure previously uninsurable risks where incumbents do not have a strong foothold,” Randing remarked. “For example, we offer affordable but highly profitable gadget insurance for crack screen and accidental damage, which had seen exponential uptake of more than 20x in the last year, with 175,000 device protections sold in December 2021.”
The insurtech company says consumers can expect many more offerings in 2023, primarily affordable, sensible products and premiums through PasarPolis.
“It’s not just a matter of cost, but whether underwriter firms are willing to launch affordable products for Indonesians. PasarPolis is determined to answer the main challenges posed and serve the vast underinsured so that all levels of society in Indonesia can be insured. We want to make the entire process of buying and claiming insurance delightful, with everything just a tap away,” said Randing.
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