Nearly two years ago, Malaysian Lee Yen Ming had an accident he thought could leave him paralyzed for life. He fractured two of his vertebrae after falling off a ladder as he was trimming a tree in front of his house.
While the ordeal was painful and the paperwork surrounding insurance claims tedious, he was glad he got treated in a good facility without having to worry about the bill.
That made him think. “Insurance is always seen as a cost and not a need. And when any unforeseen circumstances happen to us or our loved ones, it is often too late,” he told Tech in Asia in an interview.
The problem is insurance agents in Malaysia usually sell one-size-fits-all policies, which tend to be really expensive.
So Yen Ming and his co-founders – Wilson Beh, Winnie Chua, and Jason Lee – created PolicyStreet.
The #startup, which just raised US$500,000 from KK Fund, curates cheap insurance products targeted towards specific groups.
“We aim to advance inclusive insurance to help urban poor, emerging middle-income, millennials, and interest groups obtain adequate insurance protection,” Yen Ming said.
A substantial price cut
PolicyStreet acts as a marketing and technology partner for insurers. Here’s how it works, according to Yen Ming:
- The team uses an offline-to-online strategy by approaching groups of like-minded individuals to try to understand their needs, and then curates insurance products to suit their lifestyles.
- These products are hand-picked from insurers and are not generally sold by traditional agents because the price points are too low for them to earn a decent commission.
- PolicyStreet lets users sign up online, instead of having to sign a physical form.
- It’s working with big data, gathering information from an “expression of interest” survey to the public, to aid insurance companies in developing new products.
In exchange, the startup gets a commission out of every sale. Because it doesn’t compete with insurance agents, the company can offer basic life protection for as low as US$2.32 (RM 9.85) per month.
That’s nearly a hundred percent cheaper than the investment-linked life insurance usually offered by agents which costs about US$47.11 (RM 200) to US$70.66 (RM 300) a month.
“We provide an appealing and alternative avenue for those who are looking for their first insurance with minimal budget,” stated Yen Ming.
Chasing like-minded individuals
PolicyStreet is driven by a founding team with more than 30 years of collective experience in multinationals. Yen Ming previously worked as a marketer for Malaysian mobile phone operator Maxis and several banks like Standard Chartered and Citibank. Beh was a regional investment banker from Maybank, while Lee served as a wealth manager at Standard Chartered. Chua was a former actuarial and strategy specialist of Allianz, one of Malaysia’s largest general insurers.
Knowing the challenges of the insurance sector, what they did was open it up and make it accessible to a much larger audience.
Apart from bringing down the cost, the team simplified insurance jargon through FAQs on their site, unlike conventional policies which are several pages long.
“Our in-house product team spends a lot of time understanding the needs of our target groups and curating the best-in-value products,” Yen Ming said.
Those target groups currently include animal lovers, photographers, and musicians who are looking to get protection for their pets and gear. There are also insurance products catering particularly to sports enthusiasts like golfers and cyclists.
The startup’s business-to-group approach is still fairly rare. Yen Ming said they don’t directly target individuals. Instead, PolicyStreet reaches out to influencers within groups and works with these leaders to get members protected. “Usually, the members in one group have similar requirements and we are able to achieve economies of scale,” he noted.
The model seems to be working well. Since starting its operations early this year, PolicyStreet has been profitable, having underwritten more than US$16.5 million (RM 70 million) in protection in terms of sum assured, Yen Ming claimed. “We have helped uninsured Malaysians get some form of basic life protection.”
Turning a gap into opportunity
The challenge for the insurance sector aside from cost is the lack of awareness on the need of getting coverage, said Yen Ming. Malaysians are grossly under-insured, with the insurance penetration rate in the country hovering at 55 percent over the last few years, he said. Despite this, however, a total of US$14.4 billion (RM 61.3 billion) in premiums and contributions (link in PDF) were collected by insurers in 2016, according to the Central Bank of Malaysia.
This means the gap could translate to an even bigger market, which PolicyStreet hopes to capture by “making insurance sexy and fun” through technology.
Moving forward and with the help of the investment from KK Fund, the startup will continue to crowdsource information to figure out new products suitable for various interest groups. It also looks to hire more staff and expand its operations in Malaysia.
Converted from Malaysian Ringgit. US$1 = MYR 4.25.