Insurance isn’t an industry that is necessarily closely connected with innovation — after all, an industry with a 300 year legacy is hard to shake up!
Deloitte suggests that though 2017 saw a decline in new insurtech startup activity (only 88 were launched that year – half the number of fresh companies from the years before), insurtech players are still doing brisk business; the first half of 2018 saw as much as US$869 million pouring into the industry, and is on track to equal the US$1.82 billion raised in 2017.
Though much of that growth is still focused in the West, Asia Pacific, which holds 14 percent of the market, is set to be the fastest growing region for the foreseeable future.
Insurtech broke out into the mainstream market in much the same way fintech did: by unbundling the retail space through digital platforms, therefore offering customers more choice, and providing convenient ways to make transactions and interact with their brand and business. However, a subtle shift has been occurring, as the technologies that support the wider fintech world become increasingly sophisticated.
Today, we are increasingly seeing the emergence of insurtech companies that are working on bringing innovative insurance into the industry’s commercial segment. While some of those companies are still working on unbundling financial services, many more mature startups are focused on solving the big problems inherent to the insurance industry.
One such company is Sunday, Thailand’s first and only insuretch startup. It bills itself as a “full-stack insurance business” that serves its customers throughout the purchasing and claims process. Sunday exploded onto the marketplace with its innovative products that are built atop machine learning and artificial intelligence frameworks, bolstered by big data analytics.
Customised, down to the individual
Sunday was started with the mission of solving insurance’s pricing issue. Their bold claim: AI and machine learning can fix these problems. According to Dhanadham Pokthitiyuk, Sunday’s Head of Marketing, the company started when they noticed an unfulfilled need in the Thai market for insurance that worked for the customer, not just the insurance company.
“There are various pain points from the users that never have been resolved,” Pokthitiyuk said. “We did a lot of market research on and came out with ideas on how to make people’s lives easier and more fuss free. This is one of the reasons why we name ourselves ‘Sunday’, because we want everyone feel easy like Sunday morning, 365 days a year.”
The core idea of Sunday’s business model is their clever use of AI and ML in the creation of their insurance products. By leveraging on their ML algorithms, Sunday is able to provide customers with a wider range of insurance policies that are highly customised in terms of cost and coverage, in order to provide the best value.
Sunday’s business model is predicated on a creative premise that the company could accurately assess a customer’s individual risk rating. This means that each user will receive a product pricing that is based on their individual risk and not market or population aggregated risk.
They do this by taking into account previous variables not usually considered by traditional insurance players, at various “touch points ranging from product design, dynamic pricing, [up to the] claims process”, explained Pokthitiyuk. “I think the possibilities are endless. We need to be creative in the way we use data and tech and that is the key.”
A focus on the unserved
“We believe that we are building a company that is adaptive…to the risks that we are trying to cover and serve our customers what they need,” Cindy Kua, Sunday’s CEO and co-founder, said in an interview with Amazon Web Services. “We want to use data and technology to completely redefine the entire insurance value chain.”
She further explained that Sunday’s model is able to fully automate the claims assessment model from beginning to end. “It is flexible to price and provide any type of products for any type of customer in real time,” Kua said.
Sunday has tapped into two major issues within the insurance industry: cost and accessibility. Most insurance firms are not incentivised to provide products to lower-income communities because it is costly to operations.
However, there is a huge business case for insurtech companies working to introduce more affordable and relevant products to lower-income populations: there are as many as 3.8 billion uninsured individuals in emerging markets, and 84 percent of catastrophic economic losses in Asia (or US$26 billion) went uninsured in 2017.
This massively unserved market could prove hugely lucrative.
Sunday’s success in the market had a lot to do with the key decisions it made regarding product expansion. According to Pokthitiyuk, the company started its expansion in the area of motor insurance, especially for taxi drivers who fork out exorbitant fees for public use cars. “We started gathering data about how these drivers drive and their risk and design the bite-sized motor insurance product that fit with their needs,” he said.
Their groundbreaking motor insurance product led to a tie-up with Grab, where Sunday would offer “Grab Driver’s Health”, a policy that would enhance drivers’ livelihood and work conditions in busy, congested Bangkok. Sunday said that the partnership would help alleviate some of the issues created by the gig economy, where uncertainty is the name of the game.
These “bite-sized” policies have become a staple of Sunday’s business model, as they work with the needs and resources of Thailand’s generally low-income population. Another bite-sized insurance scheme that Sunday offers is its affordable travel insurance micro-policies that include flight delay compensation.
Sunday is also exploring an expansion into the B2B group health insurance segment, in order to sidestep problems posed by traditional, pre-made health insurance packages that usually prove inaccessible for SMEs and businesses with limited financial resources.
Pokthitiyuk said the company has plans to expand beyond the immediate Bangkok area, where they are headquartered, and eventually other countries in Southeast Asia.
Embedded deep in Sunday’s philosophy is a commitment to serving its customers where they are by providing the most optimised option. Pokthitiyuk advised startups that want to scale up their business and find similar success to focus on the user’s perspective before their own.
“Start with the needs of the users; many start-ups fail because they mainly think about the products but forget how to scale them. Thinking from users perspective is also important,” he said. “The products need to solve customers’ pain points and serve their needs.”