Insurtech Connect Asia spoke to four of Asia’s leading venture capital investors to find out.
Low insurance penetration, growing insurance uptake, huge growth potential and strong consumer appetite for digital solutions make Asia ripe for insurtech innovation – and investment by venture capitalists with the capital to bring solutions to scale.
Insurtech Connect Asia assembled a panel featuring four venture capital funds – Singtel Innov8, Chinaccelerator, Leo.Capital and STRIVE – each of which has already invested in early stage insurtech ventures in Asia and continue to seek opportunities. Panel moderator Kayvon Deldar, Director - Singapore InsurTech, FinTech & HealthTech, for Plug and Play, the financial services innovation platform, first asked each speaker how they define the amorphous term ‘insurtech’.
The investors broadly split the insurtech market into two types of company - ‘disruptors’ bringing new tech-driven products to the insurance market and ‘enablers’ helping incumbents operate faster, cheaper and more efficiently. Insurtech also includes ventures enabling insurance to be monetised as an add-on service and firms bringing valuable data tools to the market, the experts said.
Insurtech start-ups face multiple challenges when attempting to crack Asian, they warned, from high acquisition costs and a variety of regulatory regimes to navigate to the challenge of competing with globally established insurtech cometitors – but the opportunity to launch and dramatically scale solutions over the coming years is clear for all to see.
“The most exciting thing about insurtech in Asia is that in many Asian countries insurance is still a product most consumers are yet to experience,” said Shwetank Verma, General Partner and Co-Founder of Leo.Capital.
While the speakers’ firms each have slightly different preferences in terms of the business models they seek to invest in, they all agreed distribution is a key area in which insurtechs can add value and help insurance reach a much wider market with greater efficiency – particularly given Asia’s huge untapped population of potential insureds.
“Microinsurance is also huge as it gives new customers access to multiple products they couldn’t otherwise access,” noted Selvam Moorthy, Director – Investments of Singtel Innov8 – though the high volume, low margin nature of microinsurance is not to all investors’ tastes.
So what do these venture capitalists look for when considering an insurtech investment? “It depends on what product they are building,” Verma said. “If they are selling to incumbents, having incumbent experience in the team is super important.”
At the same time, tech talent is essential, with both Verma and Moorthy having passed on teams with deep insurance expertise but insufficient tech capability. Access to proprietary data that can be used to build future products is also very attractive, added Nikhil Kapur, Partner at STRIVE. “Data scalability, acquisition and usage is really important, so we also look for a data background in founding teams,” he explained.
Oscar Ramos, Partner and Managing Director of Chinaccelerator, also highlighted the ability to earn the trust of counterparties and follow through on what has been promised as key factors. “The insurance industry is full of gatekeepers. We’ve seen so many companies develop amazing products who are not able to get through the door – and others who got through the door and couldn’t deliver what needed to be delivered,” he warned.
Credibility is therefore key, and a big part of that is having the right mix of experience and expertise within the founding team. But it all starts with the right solution – one that is new, enhances the value chain and has the scalability needed to seize on Asia’s unique potential.