Think “insurtech” and one thinks of a scrappy startup taking on the traditional AIA/Prudential/Allianz incumbents’ mob. And SingLife is trying to do that, along with digital insurers such as Bowtie, Blue and (in part) FWD.
SingLife has just rebranded. It was until now “Singapore Life”, a traditional insurance brand with lions in its logo and everything. Now it’s styling itself as a tech company, and it’s pursuing a business model that is redefining what insurtech can be.
Walter de Oude, SingLife’s CEO, has broader ambitions. The firm has just issued a Visa-approved debit card that makes it a competitor to money-market funds, to bank deposits, and to fintech companies like Revolut.
It’s a twist on the current drive by many insurance companies – be they startups like Bowtie or traditional players – to be part of an ecosystem. The argument goes that insurers need to tie themselves to something bigger, a bank or a virtual bank, in order to access new customers.
But what if the insurance company becomes the center of the ecosystem? That’s what SingLife is trying to do.
Not just direct-to-consumer
De Oude explains that, first of all, SingLife is only partly digital – that’s its direct business. But direct accounts for only about 25% of its premiums sold (to about 15,000 customers). The majority comes from a very traditional advisory business that caters expressly to global rich individuals who want to bank – and insurer – in Singapore.
It’s de Oude’s view that a digital-only insurer is destined to fail because there are still too few people willing to use it. This is likely to change, but for now, for the business to succeed it still needs agents out there wooing customers.
That provides a stable base from which SingLife can pursue its more digital ambitions. But digital sales require an ecosystem to develop scale. Instead of attaching the brand to, say, an e-commerce platform that owns the customer, SingLife is trying to attract people.
Enter the Visa card.
“We can give customers a 2.5% yield on their premium,” de Oude says. Allowing customers to earn something on the money they give the insurer puts it in competition with bank accounts (which typically offer negligible interest) and with money-market funds.
“Just a debit card”
The advantage that deposits and funds have is that customers can withdraw cash any time, whereas a premium placed with an insurance company is locked in.
So SingLife’s card – and the mobile app affiliated with it – allows people to treat their premium as something that can be spent. “It’s just a debit card,” de Oude said. “It lets you save, or tap the card or use your phone to spend the money or transfer it back to your bank account. And I’ll give you commission-free foreign-exchange, and an unemployment benefit” commensurate with how much people spend with the debit card.
The idea is to create a reinforcing spiral. People buy an online insurance policy partly to get a card, against which they can spend the value of that premium, get additional insurance, and get Revolut-like benefits.
If people like the experience, they’ll use that card to spend more…until they hit the end of their premium amount, at which point they have to re-up. SingLife, meanwhile, charges a fee per transaction (which goes to fund its unemployment insurance benefit), and moves clients who max out to other offers beyond the basic 2.5% return program, with longer term premiums that can in turn be converted into spending programs.
SingLife will also offer a metal card to bigger spenders.
But, de Oude contends, SingLife is not engaging in banking activity. It is not taking deposits or making loans.
“Revolut’s not a bank,” de Oude said. “They’re managing money.” He says he’s putting a similar activity on top of the insurance business. “We’re not accepting deposits; we’re investing your insurance premiums.”
And Singapore government backing for insurance contracts, on average, exceeds its S$75,000 deposit insurance.
To make this work the firm will run a liquidity fund, in order to meet customer spending off their premiums. But de Oude is betting that the attractiveness of a yield plus the other benefits will encourage customers to keep their money with SingLife.
This is SingLife’s strategy to build a similar kind of funnel of customers that digital insurers would otherwise get by teaming up with a Big Tech company, e-commerce platform or conglomerate.