Fuse Takes a Different Viewpoint to Improve Insurance Product Literacy

According to OJK data, insurance penetration in Indonesia in 2019 was at 2,81%. A year later this value rose slightly to 2,92% and to 3,11% in June 2021. Although still relatively small, this increase 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 is still very unequal. This huge potential for growth is used by many parties, 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 dispensing micro-insurance products that are carried out by many startups.

Share Fuse, this approach is considered less effective in increasing penetration in a short time. This startup founded by Andy Yeung and Ivan Sunandar actually takes a different approach, Fuse empowers insurance agents with a digital platform.

In a joint interview DailySocialYeung explained, when he first started Fuse in 2016, it was clear that agents/brokers played an important role in the insurance sales chain and that they would not be disrupted by technology any time soon. Finally it was decided to build the Fuse Pro application to enable and support agents/brokers in digitalization. At the same time, helping them change their offline business to online.

“In other words, we are “shifting existing insurance” online, rather than trying to “create” a new insurance market like microinsurance. "That's why we focused on this agent/broker business model especially from day one," he said.

Yeung continued, microinsurance businesses need a long time to build trust with channel partners and thereby educate their end customers. A concrete example can be seen from the collaboration with Tokopedia. Fuse helped them launch top up Its first transactional insurance was when people bought plane tickets in 2018.

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

Yeung himself is entrepreneur series. Previously he had been involved in various startups. Some of them are moving in video streaming, group buy e-commerce, mobile game publishing, and apps Wi-Fi sharing.

He jumped into founding Fuse only because his first startup in Indonesia was unsuccessful in monetizing. “That's why I looked into fintech and finally ended up into space insurtech. "

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

Huge opportunities in insurtech

According to Yeung, the growth space for insurance and insurtech businesses in Indonesia is still very wide because there are many pain points that must be resolved by insurance entrepreneurs/companies. These opportunities are infrastructure, such as payments, cost-effective distribution channels that are becoming more mature, as well as awareness of the benefits of having insurance to protect.

"Even so, the challenge is for more entrepreneurs/insurance companies to enter this space and compete homogeneously, rather than being pioneers looking into underserved areas."

Even so, for Fuse, it still treats insurance companies as partners to mix and match underwrite various types of insurance products. Fuse is the party that distributes these insurance products effectively through its distribution channel partners.

He said that his party does not want to make Fuse a licensed insurance company in the near future. Instead, it still wants to be an independent technology platform that partners with more insurance companies. “Instead of creating our own to compete with our corporate partners.”

Currently, Fuse not only operates in Indonesia but has also been present in Vietnam since 2020. Insurance and startup penetration there still has a large room for growth, just like Indonesia, so not only Fuse, but also other local startups are working on this opportunity.

In fact, according to Yeung, his party 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 are told by potential investors looking across the insurtech space in Indonesia & Southeast Asia that we are among the largest in terms of gross written premium (GWP) and even in terms of valuation.”

It is claimed that Fuse's GWP will reach $50 million (more than Rp. 700 billion) in 2020. This GWP value is targeted to reach the range of $100-120 million (around Rp. 1,4 trillion-Rp. 1,7 trillion).

According to data processed by DSInnovate in "Insurtech Report 2021", the GWP recorded by the insurance industry in Indonesia has reached $20,8 billion in 2020. Life insurance dominates with a value of 73,8%.

Even though it was affected by the pandemic at the beginning of its emergence in Indonesia, this sector was relatively able to recover quickly when viewed from the Gross Premium Income obtained.

In the report above, there are several important factors that can encourage insurance adoption. First, fill in the claims process which must make it easy (48% of respondents). Then the second one is related brand service providers who have to convince (39%). Then proceed with costs (37%) and benefits provided (11%).

Agency's vital role

Actually, startup insurtech currently also has agency services to boost sales of insurance products through agents (B2B) in addition to retail channels (B2C). PasarPolis have PasarPolis Mitra and Qoala with Qoala Plus Partners. It's just that both of them focus on retail first and then business, while Fuse is the opposite. There is nothing wrong with these two business segments because they have the same enthusiasm, namely wanting to increase the penetration of insurance products in Indonesia.

Agents are at the forefront of insurance companies in spurring 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 15,06 2,1%. In total, the number of licensed insurance agents rose 635.326% to XNUMX 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 strategy agency. “Please note that not all life insurance companies use agency as a distribution channel. "So this only applies to life insurance companies that use agents as salespeople," he said as quoted from Cash.

Separately, when contacted DailySocial, Togar reiterated that the agency model cannot be separated from the culture of Indonesian society until the entire community understands the importance of life insurance protection for him and his family. Because, until now, insurance products are still 'sold', not 'bought'.

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

"In an analogy, instant noodles can just be put in , then people come to buy it. Life insurance products can't do that. He must be offered. So, this is why the role of life insurance marketers is so important," he said.