According to OJK, Indonesia’s insurance penetration in 2019 was at 2.81%. A year later, this value rose slightly to 2.92% and to 3.11% in June 2021. With relatively low rate, this is a positive signal for the insurance industry in the country, especially during the pandemic. In comparison, insurance penetration in Thailand reached 4.99% and Malaysia 4.72%.

The ratio of policyholders to the total population of Indonesia still considered very unequal. Many have been using this huge potential for growth, including insurtech startups, to continue to raise public awareness to have insurance in the easiest, cheapest, and most practical way. This step has been translated by intensively mixing micro-insurance products performed by many startups.

For Fuse, this approach is considered less effective to increase penetration in a short time. Founded by Andy Yeung and Ivan Sunandar, this startup actually takes a different approach, Fuse empowers insurance agents with a digital platform.

Yeung explained in an interview with DailySocial, when he first started Fuse in 2016, it was clear that agents/brokers play an important role in the insurance sales chain and they will not be disrupted by technology in the near future. Eventually, the Fuse Pro application was developed to enable and support agents/brokers in digitization. At the same time, helping them turn their offline business into online.

“In other words, we are “shifting existing insurance” online, rather than trying to “create” new insurance markets such as microinsurance. That’s why we focus on this agent/broker business model, especially from day one,” he said.

Yeung continued, microinsurance businesses require a long time to build trust with channel partners and educate its end customers. A clear example is the collaboration with Tokopedia. Fuse helped them launch its first transactional insurance top up as people buy plane tickets in 2018.

After 3 years of working together, Fuse finally won the Tokopedia’s trust and appointed it as the only insurtech service to support all general needs of insurance products offered on the Tokopedia platform starting this year.

Yeung himself is a serial entrepreneur. Previously, he has been involved in various startups. Some of them are engaged in video streaming, group buy e-commerce, mobile game publishing, and Wi-Fi sharing applications.

He shifted into establishing Fuse only because his first startup in Indonesia was not successful in monetizing. “That is why I looked into fintech and eventually ended up in the insurtech space.”

In 2018, Fuse joined Cekpremi and Ivan Sunandar (Co-founder of Cekpremi) became Fuse’s Co-Founder and COO. Ivan started Cekpremi in 2014, the startup is one of the leading insurance comparison sites in Indonesia.

Insurtech potential

Yeung said, the space for insurance and insurtech businesses growth in Indonesia is wide as there are many pain points to be resolved by entrepreneurs/insurance companies. These opportunities are infrastructure, such as payments, maturing cost-effective distribution channels, and awareness of the benefits of having insurance protection.

“However, the challenge is that more entrepreneurs/insurance companies enter this space and compete homogeneously, rather than being the pioneers to look to underserved areas.”

However, Fuse still treat insurance companies as partners to combine and underwrite various types of insurance products. Fuse becomes the party to distributes the insurance product effectively through its distribution channel partners.

He said that his team is yet to make Fuse a licensed insurance company in the near future. Therefore, it will be an independent technology platform that partners with more insurance companies. “Instead of making our own company to compete with our corporate partners.”

Currently, apart from Indonesia, Fuse also available in Vietnam since 2020. Insurance penetration and startups in that country still have huge potential for growth as it is in Indonesia, therefore, this opportunity not only worked for Fuse, but also other local startups.

Also, Yeung said his team plans to increase its presence in several other countries this year. The company has expanded its partnerships with some of its channel partners to other countries.

“In fact, we were told by potential investors looking across the insurtech space in Indonesia & Southeast Asia that we are considered one of the largest in terms of gross premium income (Gross Writing Premium/GWP) and even valuation.”

It is claimed that Fuse’s GWP will reach $50 million (more than Rp700 billion) in 2020. This year, the GWP value is targeted to reach  $100-120 million (around Rp1.4 trillion-Rp1.7 trillion).

According to DSInnovate’s data in the “Insurtech Report 2021”, Indonesia insurance industry’s GWP has reached $20.8 billion in 2020. Life insurance dominates with a value of 73.8%.

Even though it was affected by the pandemic on its entrance in Indonesia, this sector was relatively able to recover quickly as seen from the Gross Premium Income.

In the report above, there are several important factors that can drive insurance adoption. First, the claim process should be easier (48% of respondents). Next, it is related to the service provider brand that must be convincing (39%). Also, cost issues (37%) and benefits provided (11%).

Agent significance

Actually, insurtech startups also have agency services to boost sales of insurance products through agents (B2B) in addition to retail channels (B2C). PasarPolis has PasarPolis Mitra and Qoala with Mitra Qoala Plus. However, both of them focus from retail first to business, while Fuse is the opposite. There is nothing wrong with these two business segments as the spirit is still the same, to increase the penetration of insurance products in Indonesia.

Agents are at the forefront of insurance companies in accelerating business. According to data from the Indonesian Life Insurance Association (AAJI), this channel contributed to 36.1% of the total life insurance premium income until the third quarter of 2020. Then, followed by the bancassurance line 46.95% and the telemarketing line 1.88%, and others 15 0.06%. In total, the number of licensed insurance agents rose 2.1% to 635,326 people during the period.

AAJI Executive Director Togar Pasaribu said, for life insurance companies, agents are like fresh blood. If you don’t recruit, it will endanger the company that adopts the agency strategy. “Please note that not all life insurance companies use agencies as their distribution channel. Therefore, this only applies to life insurance companies that use agents as salespeople,” he said as quoted from Kontan.

Separately reached by DailySocial, Togar reiterated that the agency model cannot be separated from Indonesian culture, therefore, all people understand the importance of life insurance protection for them and their family. This is because the insurance products are ‘sold’, not ‘purchased’.

This agency business is expensive and has a high turnover. Even so, companies that rely on this channel still have to recruit in order to keep growing under any conditions. Togar said that there is a general formula for recruiting agents, it is 10:3:1. It means, out of every 10 people invited, only three people are interested and take part in the training. However, in the end only one person was willing to become a life insurance agent.

“In an analogy, you just put instant noodles on the display, then people come to buy them. Life insurance products can’t do that. He must be offered. Well, this is why the role of life insurance marketers is important,” he said.

–
Original article is in Indonesian, translated by Kristin Siagian