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Five New Types of Insurance In Asia: From Revenge Porn To Drones

Insurance - text illustration with social icons and tablet computer and mobile cellphones on cyan digital world map background

Vladislav Solodkiy, managing partner at Life.SREDA VC

Source: LetsTalkPayments

Insurance offers a huge opportunity that has yet to see real innovation. The major players have some of the lowest Net Promoter Score (NPS) ratings of any industry, meaning the companies do not inspire satisfaction or loyalty in their customers. People do not like or trust insurance companies.

There are about 500 insurtechs across the world right now, and yet over the last 18 months, more than 100 insurance startups have launched – but less than 10 of them are from Asia. Many entrepreneurs are waking up to the fact that insurance is arguably one of the most old-fashioned, analog consumer services in existence, but still not so many of them are creating companies to upend this premise.

Some of traditional insurance players from Asia (like Chinese giant Ping An) are very successful in digital transformation – but most of them are too far from their US\EU-colleagues. Vivek Garipalli, CEO of Clover Health, mentioned why startups are more successful than traditional players in innovation: “There’s a big difference between spending a lot of money on technology and being a technology company”.

New types of insurance in Asia will come along with new ideas from US or Europe, their business models and monetization strategies, success of implementation of new technologies and gadgets (like VR, self-driving cars, drones) in the region, as well as data on new generation customers’ behavior.

P2P-Insurance: Back To The Original Idea Of The Mutual Company

While other insurance companies make money when denying claims, Lemonade only takes one flat fee. In addition, they give all unclaimed money to the charity of your choice. What’s more, your donation is pooled with other Lemonade customers who also want to give to that same charity – whether it’s a big international non-profit or a local PTA. So the more leftover money from all of you, the more your charity gets. Since its public launch with a $13 million investment from Sequoia Capital and Israeli venture investor Aleph late last year, Lemonade has amassed a series of impressive wins.

Who can bring this idea to the Asian market? Maybe Hong Kong-based billionaire Li Ka-Shing, who invested recently in the same startup – Berlin-based Friendsurance. Louis de Broglie, CEO of InsPeer, describes the method’s value as follows: “The idea is to use technology to help you leverage your local community – with all its positive aspects. So it is true that we are coming back to the original idea of the mutual company.”

Sharing Economy, Self-Driving Vehicles, Millennials

NY-based Slice Labs offers insurance for on-demand workers and providers like Uber and Airbnb, starting with rideshare drivers and then homeshare hosts. The startup has raised $3.9 million in seed funding from Horizon Ventures, a private investment arm of Li Ka-Shing, and XL Innovate. These products will be available on a transactional basis — so ridesharing drivers should be covered from the moment they start driving or get into a car, and they only pay for coverage during the time when they work (making it more affordable than just taking out a pricey commercial insurance policy).

Cases of companies like Didi and Grab are showing us how on-demand economy’s ideas can be better localized and customized for needs of Asian market – and finally win the competition. So many workers already involved in this industry across the region – products like Slice or Metromile will found huge demand here.

Dan Preston, CEO Metromile, mentioned: “Metromile’s differentiator is down to “urbanization and a shifting mindset of millennials.” By this, he means that the less frequent and less regular use of cars by these groups makes per-mile services.” “Our go to market strategy is focused on large urban areas and aimed at developing a brand with each city that we roll out into. The people who switch to pay-per-mile insurance commute differently. They take multiple forms of public transit, walk, bike or even ride-share to work so a usage-based option makes more sense to them.” The same trend related with sharing economy and “to use, not to own” millennials’ behavior has influenced many services across Asia already.

Cyberinsurance In A Digital World

The Verizon 2016 Data Breach Investigation Report concludes that large and small companies across all industries in all geographies are at risk of being targeted by a cyber-attack; in fact, it is estimated that 62 percent of cyber breach victims are small to mid-sized businesses.

In just a couple of years, the U.S. cyber insurance market has grown from about 10 insurers to 50 that provide stand-alone cyber insurance policies. In 2015, these providers generated $2.75 billion in premium revenues in the U.S. According to a recent study by PwC, this number is set to triple to $7.5 billion by 2020.

Cyberinsurance is a sub-category within the general insurance industry, offering products and services designed to protect businesses from internet-based risks. High-speed growth of ecommerce, messengers, fintech startups across Asia, and low level of financial and technological literacy of customers from rural areas will influence a lot for demand for this kind of risk-protection.

Revenge Porn And Cyberbullying Security

Live streaming of revenge porn is on the rise on the internet, Europe’s police agency warned recently, saying vulnerable young ladies are increasingly falling victim to sexual predators. Porn revenge is an issue already in China, India, South Korea, Myanmar, New Zealand, and other Asia-Pacific countries too.

A U.S.-based insurance company announced a new policy that specifically covers the damage of online abuse. Chubb Insurance told that its personal cyberbullying insurance would cover counseling fees, lost income from taking off from work, and the cost of hiring an online reputation management firm to help remove smears online. Though the policy is aimed at parents whose children may become victims of cyberbullying, it will also cover adults who are targets of online harassment, which it defines as “three or more acts by the same person or group to harass, threaten or intimidate a customer.”

Once considered harmless trolling, online harassment is increasingly recognized for its serious offline consequences.

From Car To Drone Insurance

China’s consumer drone market is getting crowded every quarter as a number of startups are coming to the market and trying to challenge the leader. Dajiang Innovation is estimated to account for 70% of the drone market last year. Commercial use of drone aircraft, which will take place over the next decade, is expected to shake up industries ranging from motion pictures to agriculture and energy.

AIG is rolling out a new set of policies aimed at the growing drone industry. The policy offerings are designed for a newfangled purpose: protecting the operators of unmanned aircraft from liability in case of collision, technical problems, or any other sort of situation that could cause damage either to people or property on the ground. AIG offers optional coverage for “spoofing”: when a hacker hijacks your drone remotely.

The future of insurtech

Most markets are lacking BaaS-platforms or open APIs (like US Bancorp or BAASIS) for launching and scaling, and local regulatory policy does not allow to quickly and cheaply license independently. For Asia, the problem of infrastructure is “the dual challenge” – so many countries, and all of them so different. We still didn’t see any successful-in-scaling insurtech-startup.

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