PasarPolis: selling insurance in a country that considered purchasing insurance a ‘loss’

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For many years, agents ruled the roost in the Indonesian insurance sector. And still, the insurance penetration didn’t cross 4 per cent.

“In Indonesia, many people tend to be reluctant to purchase insurance protection because they have to spend their money monthly or annually for a safety net purpose. When purchasing insurance, this forfeited spending is considered a “loss”, Cleosent Randing tells e27.

This is due to several factors, including the lack of education and the stigma of the challenges often linked with insurance, such as high premium costs, lack of accessibility, and complicated processes. Because of this, a major chunk of Indonesia’s population is left out of insurance protection; as of 2021, the insurance penetration is a meagre 3.18 per cent in the country, according to the financial services authority OJK.

Cleosant Randing wanted to become an agent of change here. So in 2015, he joined Michael Saputra to launch the insurance aggregation platform PasarPolis.

PasarPolis aims to provide a solution for a more embedded and frictionless insurance system. It aggregates insurance products from over 50 insurance companies in Southeast Asia through its partnerships with over 40 digital ecosystem distribution partners and its Tap Insure mobile app.

Also Read: It is costly to develop and sell insurance products in Indonesia: PasarPolis CEO

Thus far, the company claims to have issued over one billion policies; in 2022 alone, it issued 500 million policies.

Nine in ten of PasarPolis’s 80 million customers had never purchased insurance policies before, while 40 per cent are workers in the informal sector, including taxi drivers, couriers, and online MSMEs.

Standing out

Unlike its competitors, PasarPolis is a full-stack digital insurer, meaning it can underwrite its own products. For this, it has strategically collaborated with Tap Insurance, which holds a full license from the Financial Services Authority of Indonesia (OJK) to operate as an insurance underwriter.

The company also provides microinsurance or low-priced coverage solutions for any type of risk (from broken gadgets to accidents).

“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. For example, we offer affordable but highly profitable gadget insurance for crack screens and accidental damage, which saw exponential uptake of over 20x last year, with 175,000 device protections sold in December 2021 alone,” he says.

The startup has created an embedded system that allows it to distribute insurance through its partners, including e-commerce firms (Shopee, Blibli, Lazada, and Bukalapak), ride-hailing apps (Gojek), consumer electronic firms (Xiaomi), fintech companies (Home Credit and Dana), OTAs (Traveloka), and furniture firms (IKEA). It creates a win-win situation.

“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.

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. 

Going forward, PasarPolis will embrace future insurtech opportunities by developing a holistic insurance ecosystem through an embedded insurance system. This can cater to people’s daily needs — every day from the time people wake up until they drive/ride back home from work.

“We focus on delivering products that can help solve people’s daily problems based on their everyday needs as well. This is in line with our mission to democratise insurance for all by providing better accessibility, a more affordable and delightful consumer experience,” he elaborates.

Challenges

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.

PasarPolis attempts to address all these problems with its micro-insurance platform.

SEA is poised for a significant growth

Southeast Asia’s insurance market is poised for significant growth, with key regions like Indonesia, Thailand, and Malaysia representing about 60 per cent of the total premiums underwritten, according to Randing.

“We will now focus on increasing insurance penetration and literacy in Indonesia and other ASEAN countries like Vietnam and Thailand. This will be our key priority in the coming year, given the huge potential, especially amid the increasing awareness of day-to-day protection due to the pandemic’s new way of life,” he shares.

Country-wise penetration rate

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). 

Funding & Competiton

Since its launch, PasarPolis has secured over US$71 million across four funding rounds, according to Crunchbase. The latest round of US$12 million came in December 2022 in the form of convertible notes. Previously, PasarPolis raised US$5 million in a Private Equity round from IFC in February 2021.

Before the PE round, the insurtech firm bagged US$54 million in September 2020. The investors in this round were LeapFrog Investments, SBI Investment, AlphaJWC, Intudo Ventures, Xiaomi, and Go-Ventures. In the past, it also raised undisclosed amounts in seed and Series A rounds.

In Southeast Asia, PasarPolis is mainly competing with the home-grown Qoala, an omnichannel insurtech platform. Qoala works with insurers to develop products that have high relevancy for customers and make them financially accessible to their customers. It distributes retail insurance products to consumers for cars, bikes, homes, and health through its platform.

Also Read: PasarPolis secures US$54M in oversubscribed Series B to scale its online insurance biz in Indonesia, Thailand, Vietnam

Qoala claims to have processed over US$30 million in claims by partnering with insurers across Indonesia, Thailand and Malaysia.

In March this year, Qoala closed its Series B extension funding round, raising US$7.5 million led by responsAbility Investments and Appworks.

Other leading insurtech companies in the region are igloo (Singapore), PolicyStreet (Malaysia), and Sunday (Thailand).

The future

According to Randing, the future of insurance will be embedded in every daily activity. “We were the first to bring contextual microinsurance at the point of digital sales, and today our insurance products are well integrated and built in over 40 ecosystem partners across verticals. This allows us to be in a good position to win across all distribution channels, growing together with aligned interest with our partners and swiftly building a large customer base.”

“We believe buying insurance should be as simple and as frictionless as today’s online shopping experience that is very much accustomed by today’s consumers, especially during this pandemic time. Our frictionless distributions redefine insurance as relatable and easy to buy. The insurance is contextual across ecosystems with policies issued instantly,” he says.

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