Indonesian insurtech Qoala acquires FairDee
The move will open up opportunities for Qoala to expand its services into Thailand and offer a wider range of products and services. Currently, Qoala provides a broad spectrum of offerings through its omnichannel platform.
The company, which was founded in 2018 and is backed by Sequoia, MDI Ventures and Golden Gate Ventures, leverages Big Data, machine learning (ML) and artificial intelligence (AI) as well as the IoT and blockchain, to revolutionise insurance services for its customers.
Since its launch, Qoala has processed more than two million policies per month, and it has a diversified partnership portfolio that serves key industries, including life insurance, health, fintech, motor vehicle, logistics, consumables and more.
Leading partners currently include Allianz, Zurich, Chubb, OVO, Momo, Tokio Marine, Great Eastern, GrabKios, Traveloka and Dana and in 2020, Qoala expanded its regional presence to include Malaysia and Vietnam.
Meanwhile, FairDee, another startup that was launched in 2018, has experienced a seven-fold increase it’s annual Gross Written Premiums, despite the COVID-19 pandemic. The company has proven popular as it gives up to 30% on annual premiums back to customers who don’t make claims in their policy year.
Speaking about the acquisition, Harshet Lunani, fouder and C EO of Qoala, said, “FairDee and Qoala share the same vision in how insurance can be reimagined. Hence, we are doubling down on developing technology to deliver an excellent insurance experience to the community digitally in Thailand on the back of our strong SEA presence.”
He continued, “With this acquisition, we are taking a big leap in the group’s regional ambition to be the number one insurtech in SEA. Given the shared vision and expertise that FairDee’s team has been able to cultivate since its inception, we are confident to continue to serve millions of underinsured in the region.”
Co-founder and CEO of FairDee, Yujun Chean, explained , “We started FairDee to bring the best insurance experience to customers across the region. Being part of Qoala will greatly accelerate that vision, and together, we are more than excited to deliver further innovation in Thailand and beyond.”
He added, Drawing upon Qoala’s regional expertise and support, we are committed to elevating our service quality to our partners and customers in Thailand.”
Image credit: Qoala
Insurtechs are winning the race with legacy system companies
Nestled in its own place within the world of financial services, insurance is arguably more unpopular than retail banking.
That’s hardly surprising given that, from a customer service perspective, insurance is something of an off-kilter transaction. You pay a sizable premium in exchange for a service you hope you will never have to use. This image problem is exacerbated by ubiquitous tales of insurers not paying out when it is time to make a claim.
The insurance sector has long been due to an overhaul, and this is where the disruptive force of insurtech comes in - one of fintech’s most upwardly mobile subcategories. Accordingly, last year, insurtech in the UK alone attracted £262m in investment, a growth of 60% on 2019, according to Tech Nation. Insurtech’s momentous growth has been captured in a new report by The AI Journal exploring this burgeoning sector.
What exactly is insurtech?
Put simply, insurtech refers to technological innovations that seek to make insurance cheaper to buy and more efficient to use. In a similar vein to fintech, the large, established institutions have been dipping their toes into insurtech, but it’s the disruptors who are genuinely looking to shake up the status quo, diving into and exploiting those areas that traditionalists have little imperative to explore.
Examples are price comparison sites (one of the earliest forms of insurtech that was eventually snapped up by the insurers it initially sought to disrupt), claims software, customisable policies, or even smart-tech-enabled dynamic policies whose premiums can fluctuate depending on changing circumstances.
The latter, for instance, could use someone’s fitness tracker or smartwatch to monitor fitness levels, thus reducing the premium of a life insurance policy; or track a GPS system that records the location of a car and assesses risk levels accordingly.
Most consumers tend to shop around for their insurance needs and perhaps end up buying their contents insurance with one provider, their car insurance with someone else, and their pet insurance with yet another underwriter. Managing all these different policies, with their varying renewal dates and payment terms can be complex. This has led to the increase in apps that pull everything together.
More prosaically, insurtechs are developing AI that uses machine learning to act as an insurance broker, eliminating the need for a human intermediary and therefore offering more cost-effective and impartial advice.
Insurtechs and risk
But there are some obstacles in the way of insurtech’s continued evolution.
Insurance companies are averse to risk. Understandably so, as at the crux of the industry is the role of the actuary, whose job it is to analyse and measure the probability and risk of future events. So it’s little wonder that there’s a reluctance among the traditional players to welcome the disruption that insurtech brings.
Insurance is heavily regulated, a minefield of legality and labyrinthine jurisdiction, which means the idea of shaking it up can be anathema. And why would they, when their old-school business models are working perfectly fine?
There’s an understandable nervousness and unwillingness to work with startups, who themselves need to work with the bigger firms in order to underwrite risk.
While it seems like a catch-22 situation, there is growing, if cautious, interest from insurance companies, who can see the benefits of insurance with a friendlier face, innovative solutions, and a competitive edge through differentiation. As that tentativeness dissipates, the growth of insurtech will gather even more momentum.
Tom Allen's analysis is based on the findings of a new report on the fintech and insurtech industries produced by The AI Journal.