Grab and ZhongAn International are bringing digital insurance to small business owners in Singapore. Should local insurtechs be worried?
After all, PolicyPal, a startup that launched in 2016, is trying to develop products such as flight-delay insurance – the kind of thing that ZhongAn pioneered in China. And its partner in Singapore, Grab, already has a giant customer base of drivers, riders and food merchants.
Val Jihsuan Yap, founder and CEO, says in some cases there will be a battle. “For flight delay, yes there will be a fight for the market, based on who’s nimble enough to work with partners and consumers,” she said. “But the market is big enough.”
Most of the industry is dominated by firms with traditional business models, so she says entrants by the likes of Grab should help. “Another technology company means more digital adoption, so it’s not just us.”
Yap started PolicyPal, a licensed insurance broker, to set up an electronic platform to digitize processes. The business got its start in the regulatory fintech sandbox of the Monetary Authority of Singapore. At that time, no one in the industry was using APIs to connect company databases, and insurance companies gave her the cold shoulder. Eventually Liberty Mutual gave her a shot.
Today she has 16 carriers on the PolicyPal network and is extending the business to cater to local SMEs, which tend to be underserved by large insurance brokers. Companies can manage group health and dental care with immediate payouts, without needing an agent.
The company also launched PalNetwork last year, a blockchain-based scheme to work with insurance companies to develop things like flight-delay and personal-accident products.
It helps, of course, to have funding. And PolicyPal has funding. Its PalNetwork arm was financed through an initial coin offering in March 2018. The PAL token was marketed to allow network members to buy insurance.
Asked about the tokens now, after the ICO boom and bust, Yap said, “People don’t ask me about that anymore...people do use them to keep a stake in the platform but they don’t spend their tokens.” She is holding hers.
PalNetwork launched one billion tokens last year, at about five cents per token, raising $20 million. Today there are still nearly 500 million tokens in circulation, now valued at US$0.0066, giving PAL a market cap of $2.9 million – assuming anyone would buy them.
If PalNetwork really takes off, it’s possible its utility token could regain relevance. The service allows insurance companies to design products as smart contracts, automated through APIs, so they can sell without going through the usual, lengthy product-development cycle.
So far, there are two PoCs ongoing, one with Toyota’s in-house insurance broker in Singapore, and another with Allianz in Malaysia. They are experimenting with using the network for distribution and claims, with visual tools to analyze what’s happening.
“We hope to work with more big players,” Yap said.
In the meantime, PolicyPal is looking to add B2B business elsewhere in Southeast Asia on top of its Singapore B2C activity.
“But we’re really a B2B2C provider,” Yap said. “We always need partners to capture the consumer and their data, in order to then build new products.”
This is why she’s sanguine about big apps like Grab, which is building services around transportation, whereas PolicyPal is trying to create a more holistic service around financial services.
Its closer competition is online comparison sites like SingaporeSaver and GoBear, or from insurtechs launching their own brokerages or platforms. Comparison sites compete on price, so they tend to support basic products, whereas PolicyPal strives to manage coverage for SMEs or other users, generating premiums for insurers, while helping insurers digitalize their processes.
This is leading to new types of products for smaller companies. “SMEs can’t spend money on a big premium in one go,” Yap said. So carriers can experiment with, say, monthly premium products on the PolicyPal network. “We break down complex products into small, niche ones, with smaller ticket sizes.”
She says the company now has about 50,000 users in Singapore, of which 30,000 are active. The goal is to reach about 250,000 active users in Singapore while finding insurance clients in neighboring markets.