Qoala has played a front-and-center role in modernizing Indonesia's hidebound insurance industry. Company Founder Harshet Lunani however views the role of agents in insurance as remaining key to increasing insurance penetration. Qoala seeks to "Uberise" insurance by removing the tedious complexities of pricing, underwriting and issuance services, and enabling anyone with personal networks to become a modern "agent". Capturing unprecedented digital insights into the customer has allowed Qoala to co-create entirely new families of insurance products with the likes of Traveloka, Tokopedia and others.
(Show website | Transkrip Bahasa Indonesia)
Qoala has played a front-and-center role in modernizing Indonesia's hidebound insurance industry. Company Founder Harshet Lunani however views the role of agents in insurance as remaining key to increasing insurance penetration. Qoala seeks to "Uberise" insurance by removing the tedious complexities of pricing, underwriting and issuance services, and enabling anyone with personal networks to become a modern "agent". Capturing unprecedented digital insights into the customer has allowed Qoala to co-create entirely new families of insurance products with the likes of Traveloka, Tokopedia and others.
(Show website | Transkrip Bahasa Indonesia)
ALAN 0:12
Welcome to the 34th episode of Season Two of the Indo Tekno podcast. Selamat datang semuanya. I'm Alan Hellawell, founder of tech consultancy Gizmo Advisors and Venture Partner at Alpha JWC Ventures. Today we want to deep dive into the insurtech segment. Insurtech is basically the application of technological innovations, not just to squeeze out savings and drive new efficiencies from the current insurance industry model, but also significantly improve customer centricity and introduce entirely new solutions for their financial planning. The category has drawn even greater attention during the COVID 19 pandemic. Nearly all traditional players had already sought to digitise unwieldy underwriting processes. Meanwhile, lockdowns and social distancing have driven an acceleration in such initiatives. New economy platforms moreover, whether it be e-commerce players such as Shopee, or Tokopedia, online travel names including Traveloka, or ride sharing greats such as Grab have also delivered a profusion of new insurance products to replicate the peace-of-mind that customers had developed offline as buyers of traditional insurance products. We look forward to gaining an update on this very dynamic part of Indonesia's landscape with today's guest, Harshet Lunani, Founder of Qoala. Qoala has risen to become one of Indonesia's most dominant Insuretech platforms. Thanks for joining us today, Harshet.
HARSHET LUNANI 1:37
Thanks for having me. Great to be here.
ALAN 1:40
We're very pleased to have you on. So Harshet, how did you come up with the idea of Qoala?
HARSHET LUNANI 1:45
Like most people I didn't grow up wanting to be in insurance, right? This was not a dream from my childhood. But my previous role at BIMA definitely had a huge influence on helping me respect the industry a lot more and it's important for society. And given the dramatic change we're seeing in several industries in front of our eyes today, I also felt that similar change could be done in insurance. And in particular, in emerging markets where the importance of insurance is misunderstood, because a single event can knock a family out and put them into poverty. So from that perspective, it made a lot of sense to want to try and innovate in the space. And from a timing perspective as well, given the adoption of technology and smartphones, it was the right time for us to think about trying to innovate in the space again.
ALAN 2:26
Excellent. So let's start with the basics. What is Indonesia's current insurance penetration rate? And how might that compare to markets such as the US, China and here in Singapore?
HARSHET LUNANI 2:37
Indonesia is quite far behind, unfortunately. Currently, most estimates would peg it at anywhere between 1% to 2%. Whereas the more mature markets such as China and Singapore and the US would be anywhere between 6% to 12% or 13% of GDP. So it is a long way behind. But at the same time, perhaps a more telling metric is that Indonesia, which has double the GDP per capita of India, is at half of India's penetration. So that really tells you that it's a highly under penetrated market, also a very highly fragmented market. But equally, that's where the opportunity lies because of that.
ALAN 3:10
That's a very powerful comparison with India you just made. Now Harshet I, on the other hand, have heard that the average Indonesian may ultimately not have the same instinct to insure aspects of his or her life compared to his or her peers, regionally and globally. Would you agree with that assessment?
HARSHET LUNANI 3:29
This is an interesting question. It's hard to be very precise on this, but I would tend to disagree, I guess. Because I think with life insurance, it's a very difficult concept to understand, because it's not something tangible. And I think, therefore, this is something where education can really improve a lot. And if you go back to the 70's, or 80's, to even the US or Japan, there were similar questions asked. And emerging markets we typically see that value is based on assets first, and valuing your own life comes a little bit secondary. And there's an education piece there. And I think Indonesia, as penetration rises, and if us and some of the other players do a good job, this will change. And in fact, during the pandemic, we already started seeing some moment of this where people are realising that if they were insuring their cars for $20,000 or $30,000 or $40,000, how is it possible that they would insure their life for less than that? And I think that that change is starting now.
ALAN 4:19
Fascinating. So you're implying that there really isn't any cultural distinction, which might account for the low levels, but instead, we'll probably travel the same kind of economic evolution and increasing wealth trends that drive adoption of insurance. Is that what you're saying?
HARSHET LUNANI 4:38
Yes, I would say so. And also, I think insurance has been marketed pretty badly in the past. And I think if we can get some better products into the market which allow customers more transparency, and at the same time, of course, ensure that this can really be relatable to their lifestyle and affordability, it can lead to a change.
ALAN 4:55
So you're suggesting that educating consumers in the value of insurance is crucial. What are the best ways to improve literacy dramatically over a short period of time?
HARSHET LUNANI 5:08
There's a couple of ways we look at it. One is, if I go back to my childhood, what sticks with me are things which I experienced rather than what I was taught in a classroom only. I'm a big believer in learning about things through experience. And therefore, same with insurance. We believe claims can have a big role in helping people understand insurance, because that's the moment of truth. And if you get claims, you start having more belief and confidence. That's one. And secondly, it's also an aspect of simply trying to think about how can we engage you more and more at your critical points in life, when people start a family, when you buy a first car or home, or when there's a milestone in your life. Those are critical moments. And at that point, if there's an influencing factor, it can really accelerate the education process a lot
ALAN 5:52
Understood. I also have seen things like promotions and incentives as another powerful conversion tool in converting a customer to entirely new solutions, such as free shipping in order to bring on a new e-commerce customer. In the case of insurtech, what are the most powerful commercial drivers or incentives to the adoption of policies in Indonesia, in your mind?
HARSHET LUNANI 6:15
This is like all industries. Commercials can make some changes and incentives. And insurance is largely driven by agents who are incentive-driven. So yes, it does make some difference for sure. But at the same time, it's a regulated space. So I would say that we can't go as far as perhaps some of the other platforms in other spaces have been able to do, given the regulations and so on. But I think especially with agents, this can be a way to grow. And I think it's important to recognise that agents will probably be in the industry for a long time. And actually, they have a critical role to play. And this is seen even in the most advanced markets, such as the United States. So I think there will be around and they actually do serve a strong purpose. And yes, agents are incentive driven, and sometimes that is also a good thing if done in the right ways.
ALAN 6:59
So a lot of the internet economy bases its promise on disintermediating members of the traditional vertical that they are in, whether it's removing distribution layers as an e-commerce player, or the travel agent in online travel. But your suggestion here is that the agent remains an ever critical part of the insurtech value proposition. Is that correct?
HARSHET LUNANI 7:23
Very much so. They've proven to be very resilient against these changes in this sector. And one of the key reasons again is that there's a fundamental difference between how other platforms are adopted versus insurance. Other platforms are more for daily use cases or high frequency use cases. Insurance is perhaps a once or twice-a-year use case. And at the same time, because it's a large ticket size purchase and because it comes with so many variations and so much complexity in the product, most consumers are not able to make choices on a self-service basis. The number of factors to consider are too many. And hence, they need assistance in these journeys. And even if, let's say we take the example of Policybazaar and India, which is largest online aggregator. Even they have a huge network of telesales agents who help assist customers. And this is key to the space, because of the dynamics of the product. And we don't believe that that will go away easily. If it does, it will start with the more commoditized products which are mandatory, perhaps such as car insurance in most markets and so on. But for several other products, that will not be the case for a long, long time to come.
ALAN 8:27
Fully understand. Now I believe that Qoala saw something like 6x growth last year. What drove that expansion?
HARSHET LUNANI 8:35
It was a positive we have for us overall. Definitely. There were a couple of key reasons I would say. One is the execution of our strategy. I'm a strong believer that in Southeast Asia, it's all about execution. And our platform allows ordinary people to become agents. It also allows insurance agents to become more digitally savvy, and have a chance to use a tool which can help them really perform the activities in seconds rather than days. It has been a very powerful tool for them. And that allowed us to really ride on that and grow. Together with that we also had some success with some of our key partners within the larger ecosystem who adopted us and allowed us to work with them closely to drive adoption with consumers, their consumers. And there as well some key partners such as Traveloka have helped us grow a lot.
ALAN 9:20
Now Harshet I've heard from a couple of your partners that you personally are very "roll-up-your-sleeves" in working with them. I'm hopefully not revealing any state secrets by revealing that the people that Oyo most recently spoke your praises in your willingness to accommodate some of their unique requirements. Where does this tendency to work at the front lines of the company come from?
HARSHET LUNANI 9:42
That's very kind of them. But first of all, as much as my role now is as a founder of the company and obviously I have to look at strategic things; I've always been very fascinated with problem-solving. That is something which is a general tendency or a drive within me. And so when I see a problem, it's hard to not be drawn to it. And from time-to-time, it's still the most exciting thing that you can do sometimes. And so when there are large problems to solve, and it needs perhaps a little bit more creativity, I love to find some time to still dive in and see what I can do. And it is something which also helps the team because it's something which I can learn from them. But equally, they can perhaps learn a few things from me as well. And overall, it's good for the camaraderie within the team as well.
ALAN 10:24
Excellent. Great to hear. Now Harshet, you've spoken in past conversations with me about "Uberising" the insurance agent force. Can you tell us more about that?
HARSHET LUNANI 10:32
It's a very powerful concept, Alan, if you ask me what will help Indonesia rise and have far higher insurance penetration. And the concept is similar to someone like an Uber, or Gojek, or Grab, where really they came in and used the potential of technology together with a platform kind-of style to transform, let's say the transportation industry. Bluebird is already here, which is a great taxi company. But really, they could step it up a notch. Similarly, with insurance, the traditional industry exists. But we believe that a platform-based approach, by providing more choices, as well as transparency, and taking the technicalities of it out, individual people, everyone has their own network and friends and family who they can relate to. But what they cannot do is the technicalities of insurance, and the pricing and underwriting and the issuance. If our platform can take care of all that, we rely on is people's networks. And that way everyone can play a role in the space. And in particular, we believe that while the likes of Gojek and Grab have done a fantastic job of providing millions of people with employment, most of them do tend to be men. And we believe that with insurance, this can be extended to women as well. And so we believe it's a powerful way to provide employment for millions, but in particular, also be a choice for women.
ALAN 11:44
And when does that vision of empowering women as insurance agents really become ubiquitous? Is it something that's already happening? Is that a two or three or five-year vision?
HARSHET LUNANI 11:56
The funny thing is that in the life insurance space, there are already more women agents than males. What we're trying to do is dramatically increase the number
ALAN 12:04
Understood. Now, looking at another angle of this story, how long does it take the average customer to be approved or rejected for a plan?
HARSHET LUNANI 12:15
There are two types there. So one is insurance, which is unrelated to your personal decisions or personal behaviour. So for example, if you're catching a flight, you cannot, as an individual delay the flight or cause a flight to have a problem. So in this case, usually issuance can be instant, because the risk is completely independent. But of course, then there are other instances, such as your health or life and so on, where partly you're responsible. And those tend to be where it needs more time. For example, in motor insurance, a typical insurer would take between 7 to 12 days to issue a policy. We would probably do it in about 6 hours to 24 hours.
ALAN 12:52
So a very measurable improvement on that side. Now Harshet, what are our most popular products, currently?
HARSHET LUNANI 12:58
The most popular would be travel, even today, despite the pandemic; followed by smartphone insurance and car insurance. But I would say we see a lot of drive in particular from segments to buy health and life insurance now. But I would say that we probably need to work harder to get that right.
ALAN 13:14
Understood. And just with travel insurance, is it most commonly a voluntary "radio button" that you click before you purchase the ticket? Or is the airline throwing it in for free? Is the platform adding it as an incentive?
HARSHET LUNANI 13:28
This is a great question, Alan, because this is a philosophical question to some extent as well, right? Because all of those are possible. But as a company, we've taken the view that we want consumers to make a choice, because that's the only part which leads to education. And that's why we do micro policies for education. And if you think about for yourself, your credit card probably gives you some insurance, but because they bundle it in, you probably don't quite know what it is, and neither do you have full appreciation for it. But if you made that choice, that's a different thing. It will mean you value insurance. You're willing to pay money for it. So for us, this is where we're perhaps a little bit different. And we focus on aspects where customers make a choice. This is very important for us to do. And we believe that this drives a much higher quality of customer to us.
ALAN 14:11
On the topic of the customer, can you share with our audience some interesting facts or figures on our customers, whether it's frequency of claim or tendency to buy new products from us, etc?
HARSHET LUNANI 14:23
Sure. A couple of interesting facts. So the largest claim we ever paid out was about a million dollars. It was actually just about 35 days after the policy was bought. So that was a pretty life-changing event for the customer, no doubt. But even for us it was quite challenging, because that was a surprise claim. And so we were happy that we were able to support it in the manner that we did. Another interesting fact would be that one person bought policy of ours 38 times. So that was a very interesting and nice thing to hear that the person liked it enough to consistently keep buying the policy. And the last thing I can share is that about 20% of our customers have bought multiple policies with us.
ALAN 14:59
Wow. That's a very healthy number. I would be forsaking our audience if I weren't to ask you for a little more detail on that $1 million payout. Can you tell us the broad use case or circumstances behind that?
HARSHET LUNANI 15:13
Without going into specifics, this person had a warehouse full of expensive smartphones, and it burned down. This was within a few days of buying the policy. And it was a million dollars and would be life changing for almost anybody. And so those are the specifics I can get into. But obviously, given the nature of the claim, the size requires a formal investigation, and I'm very glad that we were able to assist there, because we have our own internal investigators. And we supported this person in getting their rightful claim.
ALAN 15:38
Fantastic. Now, you mentioned that 20% of your customers subscribe to more than one product. Do you have a target in mind where that 20% level can get to?
HARSHET LUNANI 15:49
If you take a country like Germany, an average person has six to seven policies, which is a lot. I don't think we're at that level yet. And right now, Indonesia is very much "zero-to-one" story. Most people have zero policies, and hopefully they can get to one. And hence why having this agent platform technology is so important because they can play a huge role in being able to touch customers at those points of need, and turn them into actually customers who are protected. So while this is an important number that we'd love to have grow and become 2, 3, 4, 5; for the foreseeable future, our goal is how to go from "zero-to-one" first.
ALAN 16:22
Makes eminent sense. So Harshet, what interesting behaviours did we see emerge during COVID?
HARSHET LUNANI 16:29
The most interesting behaviour I would say was the change in the customers' viewpoint on how much their life was worth. How should they value life insurance. And we saw customers who typically would say, "I want some life insurance cover...perhaps $20,000 or $30,000". And it was effectively to say that they were insured, maybe to the families are to themselves. But with the pandemic, we saw a dramatic change. And now most people would ask us for $200,000 of coverage or more. And so obviously, it's great to see that change happening. But I also think that this points towards one of the big challenges for space because insurers are not yet ready to tackle them in a manner that's fitting for such customers. Because such products and such coverages have largely been reserved for traditional channels such as bank assurance, and so on. And now that customers are demanding such things online and with other platforms, we need to find a way to resolve that. This is one of the challenges that we're working towards.
ALAN 17:23
Wow. "ow much is my life worth"? That's a question that Albert Camus or Jean Paul Sartre, or one of the other existential authors would have been asking. But I guess it's quite relevant here. Now Harshet, how do we "co-create" products with insurance underwriters? Can you give us a good example?
HARSHET LUNANI 17:40
With co-creation, effectively what we're trying to do is, first of all, we try to find a segment we think needs a certain product or could do with helping certain areas. We try to understand the broader use case first. And ideally collect data on that so that we have a good understanding of the risks as well as the service that customers will want. That's the starting point. And from that, it goes into turning that into a probability model of what can happen overall. And using that, we're able to go to insurers and have a discussion on the scale and the potential for these kinds of products. At the end of the day insurance is about probability. And by providing this information on this new segment of customers or new segment of service, we're able to help insurers get, let's say, more credibly comfortable with this kind of risk. And hence, it can lead to a creation where the insurer continues to take the risk. But we typically take over the operations and the customer interactions. Because these tend to be high frequency events. And I spoke earlier that we want education through experience. We purposefully choose products which have a higher frequency of claims and so on. And with this, it kind of breaks the traditional insurance model, which is designed for high value, low frequency. We're designed for low value high frequency. And so our system is able to operate at much more scale and effectiveness in terms of costs. And hence we can co-create where they take the risk and we take over operations and customer interactions.
ALAN 19:02
Now I assume you love all of your co-creating partners as you would members of your family. But is there one that you're proudest of or a couple that you can cite?
HARSHET LUNANI 19:12
Our work with Traveloka is something we're very proud of, because we've been able to bring many, many use cases to the market. So that's one area I would single out. From something like a flight delay as simple a product like that, to a much more complex product, such as changing your mind and not feeling like going to the trip that you planned for, and getting a full refund for a non-refundable ticket. That's quite powerful. So I would say that that's one. Another one I would point to is a smartphone product, where we were happy that we were able to provide a service and experience which would allow customers to get their phones repaired in record time. And it's critical because we're all so dependent on smartphones, right? And in some ways smartphones are the new motorcycles. Because they're just as expensive, but far more fragile. And for most people until the age of 22, 23 or 25; it might be the most expensive thing you own. So it's a very valuable part of your life and we're happy that we were able to help them with that, protecting that key part of their life.
ALAN 20:04
Harshet, what are the most valuable data and insights that Qoala can generate for our underwriter partners that nobody else can?
HARSHET LUNANI 20:11
This is a great question because insurance as I said, it's a game of probability and to get property right, you need more data. And so from that perspective, definitely, whether we're talking about when we work with platform partners, such as Traveloka, Tokopedia and so on, obviously there's many data points that customers leave. And we're able to use that to better segment customers or better understand their needs, their affordability, and so on. Because they obviously leave a large digital footprint using those platforms. And some of those get collected. But at the same time, obviously, when consumers interact, either with us directly or through our agents, we're also able to understand a lot of things. Because everything from things that are clicked, but also things suggest how much time is spent on certain screens allows us to understand what is the customer concerned about or worried about or really paying attention to. And with that, we can tweak the user experience and the product experience to ensure that it aligns much better. Now over a longer period of time, it can even result in new product creation, because we can even understand that if certain drop-offs are happening, that this product or this segment of customers is just not doing the job. And it can lead to an optimization of that product, or perhaps even an entirely new product.
ALAN 21:17
Understood. It would seem to me that these innovations are significantly dependent on the strength of our development team. Is all of our development done in Indonesia? If not, where do you have your engineering and development?
HARSHET LUNANI 21:31
Yeah a large part of our development team does it in Indonesia. But we now also have a hub in Bangalore, in India, where we have a small team of engineers as well.
ALAN 21:40
Excellent. On to something entirely unrelated. When we come back to the policyholder, who actually owns the relationship with that policyholder? Is it ourselves? Is that the underwriter? How would you describe ownership of the customer?
HARSHET LUNANI 21:54
It depends on a couple of factors. Typically, it will sit either with us or maybe jointly between us and the platform partner and the agent. In our model, definitely the insurers get access to a new set of customers. But I wouldn't say that the ownership shifts to them.
ALAN 22:08
Understood. So ultimately, anyone who is coming through the Qoala platform, you could theoretically cross-sell to. Is that correct?
HARSHET LUNANI 22:17
Not completely. Like I said, if the customers come through agents, we will want to protect and respect the agents, because that's their customer. And then we will not take any action. But obviously, if customers come to us directly, then it's a different matter. And so it's often a joint relationship where we will serve them for example, even if an agent brings a customer or claim can be serviced by us, but we will not retarget them because we will want to respect the agent for that.
ALAN 22:41
Fully understand. Now Harshet, what changes are required to drive adoption from a regulatory perspective?
HARSHET LUNANI 22:49
I think being in a regulated space, there's a lot that regulators can do. And I'm sure they're trying as well. There are a couple of big ones, which are perhaps more low hanging fruit and probably will happen, I'm sure. One will be whether motor insurance will become mandatory. So far, I would say Indonesia is perhaps the only major country I know of where motor insurance is not mandatory. This will be one upcoming change. And it will be a seismic activity, because it will trigger the industry to leap forward in a very, very significant manner. For two reasons. One is that the sheer scale of the motor insurance industry will increase. But effectively, it means everyone who has a car or a bike now begins to understand insurance. So that can lead to other products also being interesting for them. So that'll be a big one. I would say that's step one. There's a couple of other steps possible, such as a little bit of liberalisation in the tariffs and so on for certain products. But I would say this would be the first step.
ALAN 23:37
I understand. Now, Harshet, given how large and under-penetrated Indonesia is, as you've described it earlier in our conversation, is there anything to be said for going regional over the next few years? I, for instance, saw news of your acquisition in Thailand earlier this year.
HARSHET LUNANI 23:53
We did enter Thailand recently through an acquisition. Sometimes, as much as we're super-interested in Indonesia, we did realise that Thailand is actually a much larger market. It has slightly better penetration and education, but still significantly under say, the US or Singapore, and so on. So that's one, but equally, I felt that Thailand and Indonesia share many similarities. But it's just that with Thailand, we could accelerate some of our growth because the fact that it's a slightly better educated market. And hence, if we could apply our platform there, we could accelerate our path.
ALAN 24:23
Excellent. And so is further regional expansion in the cards over the next couple of years? Or do you feel like you have your hands full for the time being?
HARSHET LUNANI 24:30
We are comfortable for now. I mean, from time-to-time, we do operate in a couple of markets just to support our partners who are regional. But the main focus will be these two.
ALAN 24:39
Understood. Well, Harshet, I really get the sense of an industry in deep flux, and thus offering great opportunity for the innovators just listening to you today. And it's great to know that entrepreneurs such as yourself are leading this innovation. Thanks so much for joining us.
HARSHET LUNANI 24:54
Thanks, Alan. Thanks very much for the opportunity and have a nice day ahead.
ALAN 24:58
You're very welcome. We hope our listeners have enjoyed today's episode. As always, please consider sharing any feedback that you have about the Indo Tekno podcast with us. Terima kasih telah mendengarkan. Sampai jumpa lagi!