BEAMSTART 9 Apr, 2018
There are all kinds of insurance products in the market today, many of them sold by agents.
The simple question is this - Is the insurance plan you're about to buy the right one for you? How do you know?
As most insurance products are predominantly marketed and sold by agents, it isn't surprising that many ordinary folk may not be fully informed before making these purchases.
In fact it is a common occurrence where insurance plans purchased may not be suitable for them or providing adequate protection. In other words, they may not be getting what they paid for, or even understanding what they're paying for to begin with.
This is where PolicyStreet comes in.
PolicyStreet, a company from Malaysia has set out on a mission to help people get the right insurance plans through informed decisions.
They do this via a simple website that curates a broad array of insurance plans for people to discover, compare, and easily make purchases online. In fact, they even have a plan for pets!
Recently, our team at BEAM had the opportunity to chat with Lee Yen Ming (CEO of PolicyStreet), who shares his thoughts on the insurance industry as well as his journey in building PolicyStreet into the company it is today.
1) How did you get started with PolicyStreet? What was the drive for starting this venture?
On a fine Sunday morning in mid December 2015, I was busy trimming a tree outside my house. And as I was reaching for a higher branch, the ladder that I was using gave way and I fell to the ground hitting the hard flooring of my porch. I was brought in to the ER of a nearby hospital and underwent MRI, CT and X-ray scans. I had fractured two of my vertebras T11 and T12, one on top of the other. It was the first time I was actually hospitalised in my life and I was there for 5 days lying in a horizontal position as standing up could cause my backbone to collapse.
That got me thinking of how lucky I was being able to have this state-of-the-art treatment in a well-established hospital under the care of an experienced orthopaedic. Short of being paralysed, I was made immobile for 3 months and had to wear a brace 24 hours a day to allow my injury to heal. And I was fortunate enough to have medical insurance which covered all my medical expenses. Even with that, the process was lengthy and tedious.
In emerging markets like Malaysia, the insurance penetration is low and that’s because the average disposable income is barely enough for daily necessities. Insurance is always seen as a cost and not a need to have. And when any unforeseen circumstances happen to us or our loved ones, it is often too late. And I have seen time and time again in my life that unfortunate things happen when we least expect it.
That is when the idea of PolicyStreet was born (coincidentally our logo is a house as we believe that different people will traverse through different “streets” in life but will always end up back at home where they belong).
Together with my partners Wilson Beh, an investment banker and Winnie Chua, a strategist with actuarial background, we started this insurtech venture to educate and help Malaysians and in the near future developing nations in South East Asia get the right and “adequate” insurance protection that they need. And adequate means having the right amount of protection as we see even Malaysians who are insured are grossly under-insured by about 10 times of what they should be.
2) What are some biggest obstacles you face in running a business like yours?
Firstly, insurance is a traditional business which has been around for more than a century and it is highly regulated. And in emerging markets like Malaysia, insurance has and is being widely sold via agents. This makes it harder for insurers to even consider having digital as another channel that they can deploy to market their products. Most insurers that we meet especially the bigger ones are afraid that we will cannibalise their agents and hence are adverse to exploring the digital channel. However, just to clarify, we are not here to displace or replace the agent workforce. We tend to complement the gaps that are present by providing alternative solutions. As we can see, even with agents, the insurance penetration has been stagnant for the last few years. And with Malaysia having a young population who is digitally savvy, it makes more sense to provide an alternative means for consumers to obtain the right insurance protection.
Secondly, as we are an agnostic platform, it makes it even harder for certain insurers to work with us. Most would prefer for us to be exclusive to them which doesn’t work in today’s market where customers demand choice and options.
Lastly, on the customers’ end, there is also an uphill battle to educate consumers on the need to have insurance. Insurance has always been a taboo word as consumers are not able to equate having to pay for something intangible that has no returns unless an unfortunate incident happens. This is vastly different in developed countries where importance is placed on financial security.
3) PolicyStreet managed to raise VC round. What was the experience like?
It was not easy to explain the insurance business to VCs.
VCs have been exposed to e-commerce and expect players like us to drive volumes and GMV like e-commerce. However, insurance is different as the margin or commission structure is much higher than that of an e-commerce player. For example, a life policy could pay more than 100% of the yearly premium over a few years.
Hence, insurance is a lucrative business. According to statistics from Bank Negara, as much as RM17.4 million commissions were paid to both life and general agents in 2015. And it makes sense why most people would ask those without a job to become insurance agents.
VCs also expect insurtechs like us to start building new insurance products from Day 1. However, this is nearly impossible unless the insurtech has the necessary insurance licence which today requires approval from Bank Negara and a paid up capital of RM100million.
It has been difficult to convince VCs to see the potential of insurtechs but the presence of successful insurtechs like ZhongAn and PolicyBazaar does help in painting the future of insurance in the digital space.
4) What are your tips for newer founder/startups that are starting out and raising funding?
Never give up and keep selling your dream and vision. It does not matter is the VC is not interested in this round of funding as long you keep the relationship warm. You never know what the future will look like. It’s ok to get many rejections as you seek investors. We have been told off by many investors that our plan will not work but we are still alive today and growing.
5) We understand that you have launched a new product with Petsodia. Can you share more details with us?
Just to clarify, we have just launched a Pet Insurance by MSIG and we are the first insurtech to offer such specialised product in the Malaysian market. And in promoting this wonderful product, we have secured several partners to help promote awareness and educate Malaysian pet owners on the need of insuring their pets. Among them are Petsodia, Ministre' of Pets, a veterinarian and pet service provider, Cocomomo, an urban pets hotel, and Jompaw, an online pet service providers.
This Pet Insurance starts from RM18/month (including GST) and it covers veterinary and surgical bills, prescribed drugs and injections (subject to policy terms and conditions) to help dogs and cats in Malaysia get the best chance at recovery from sickness and accidental injuries. Other notable benefits include owners being reimbursed the purchase price or adoption fee if their pets pass away due to illness or accidental injury, and burial or cremation costs for these pets. And the wonderful part is this insurance can be purchased instantly online via our website with no hassle.
6) Best piece of advice you can give to entrepreneurs and aspiring entrepreneurs
Always have grit, passion and determination in running your business. Never give up no matter what challenges you face. Since we started, we have had numerous challenges and I am fortunate to have co-founders who have stick by me through thick and thin. Lastly, dream big!
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