How One Man is Changing Car Insurance to Help You Save Money
As part of our series to reach out to insurers and insurtech companies to bring you direct news about the evolving landscape in the insurance industry, we spoke to the founder of one of the most innovative insurtech companies in recent years. Yujun Chean of Vouch Insurtech tells us what drove him to create Vouch and how he thinks technology is changing the car insurance space for the better.
What made you think of starting a company like Vouch?
Personally, I have no prior working experience in the industry. Instead, as a consumer, I have been paying for different types of insurance for over 10 years without making a claim. During one such renewal, I wondered where my premiums were going. After some research, I uncovered some interesting statistics about the car insurance industry in Singapore. While car insurance is mandatory, only ~15% of drivers make claims annually. That meant that many safe drivers were paying higher premiums in order to cover the risks of a small set of "bad" drivers. This came across unfair and inefficient.
I was working in another startup at that point and there was a natural curiosity to explore a solution to help safe drivers enjoy even lower premiums and get a fairer deal. One of the inspirations then was the concept of peer-to-peer (p2p) insurance which promised consumer empowerment, fairness and transparency via community. I then evolved the concept to our present model whereby we co-developed a cashback car insurance product with market leading insurers like NTUC Income to retain the benefits of p2p while ensuring that consumers had guaranteed and reliable coverage from an established and reputable insurer.
On a macro level, insurance is a huge industry which is still largely an "offline" business. This is very much the case in many of the countries in Southeast Asia. There is a huge opportunity across the region to deliver value to insurers and customers alike by digitizing and improving the customer experience. Car insurance is our starting point and we plan to expand our offerings to other forms of insurance including health.
What should car insurers focus on to better cater to their customers? Do you think some of those things can be accomplished by collaborating with insurtech companies like Vouch?
Insurers have traditionally operated in a very opaque fashion. For example, as a consumer you often have no idea how your premium is priced or why your premiums could even be increasing at renewal even though you made no claims. Similarly, when you make a claim, you are not informed about the breakdown of the claim amount. Hence, I believe insurers can build more trust with consumers by being more transparent, and that's where Vouch comes in to facilitate the community building and bring more transparency to how the premiums are used, eventually enabling transparency on the claims process as well.
There are also plenty of opportunities for insurers to deliver their services in a more convenient and digital fashion. Credit to some of the insurers, they have made great progress by introducing their own mobile applications to enable easier ways to purchase policies, report accidents and file claims (sometimes by collaborating with insurtech companies).
What are some of the ways insurtech companies like yours also help the insurer?
In the case of Vouch, we provide insurers the means to have an alternative channel with a focus of attracting and retaining better risk (safer drivers who claim less). Being a digital channel, we also offer a superior customer experience as we have API integrations with our partner insurers to allow customers to obtain a quote and buy their policy online all within 5 minutes.
Besides the value proposition that respective insurtech companies bring via their solutions, insurtech companies also enable innovation and experimentation within insurers to take place at a much quicker rate. This in turn helps insurers differentiate themselves in an increasingly commoditized market. By collaborating with startups, insurers also expose their staff to a very different working culture of startups which hopefully encourages them to think out of the box more often and generate internal innovation.
Have you noticed a trend in insurers warming up to adopting new technology?
For background, Vouch operates in Singapore as vouchinsurance.sg and as fairdee.co.th in Thailand. As such, my opinions are strictly related to insurers in these 2 countries. In these countries, we certainly have had positive collaborations with our partner insurers, which is reflective of their willingness to try new concepts or technology. On a wider scale, my opinion is that insurers are generally open to discussions and conducting proof of concepts. For example, in Singapore, several car insurers have piloted various telematics solutions to varying degrees of success. There are also plenty of collaborations/MOUs between insurtech companies and insurers reported in the press. That said, many of these collaborations are less than 2 years old and it remains to be seen if these initiatives are merely a function of keeping up with the competition and for PR reasons, or have a more strategic and long-term focus for insurers.
Can You Tell Us More About Vouch?
Vouch is an insurance platform working with major insurers across Southeast Asia to develop and distribute innovative insurance products. The first product we co-developed with major insurers in Singapore and Thailand is cashback car insurance that promises to be a fairer deal to safe drivers. We have launched in both markets to consumers this year with approval from regulators.
For example, in Singapore, customers get back up to 15% of their premiums from insurers if they don't claim. Everyone who purchases a policy from Vouch is automatically grouped with drivers with a similar profile and the amount of cashback each driver receives is impacted by the overall claims of the community. The fewer the claims, the more cashback everyone receives. Customers can further maximize their cashback by creating their own private groups across insurers with safe drivers they know. Customers are now incentivized to invite only safe drivers to the platform and have to “vouch” for their friends when they join the community. Otherwise, the product is exactly the same as before in terms of pricing and coverage, hence a fairer and better deal for safe drivers!
In Singapore, we partner with NTUC Income, Sompo Insurance and Tokio Marine Insurance. We were also selected by global reinsurer Swiss Re as 1 of 5 start-ups globally to be part of their InsurTech Accelerator 2017 programme.