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In 2015, Thailand’s insurance sector was valued as the 8th largest in Asia, with an annual growth rate of 4.5%. Thai residents spent approximately $334 on insurance every year, accounting for an overall penetration rate of 5.5%.

Life insurance accounts for the largest segment within the insurance industry in Thailand. These are annualized premiums paid out in the event of death or permanent disability; or after reaching a certain age. If you subtract life insurance from the overall industry pie, premiums decline considerably to $100/capita.

Photo credit: Thaire.

And this is where the largest potential for growth lies.

Thailand is already considered to be an upper-middle income country by the World Bank, with a GDP per capita of $6,033. When you combine that with a rosy economic outlook, it’s straightforward to predict that the size of motor and travel insurance will rise, too. Higher disposable incomes will lead to a greater outlay on cars and vacations – and the insurance industry is bound to benefit.

But one of the problems currently plaguing Thailand’s insurance sector is that distribution channels are antiquated and riddled with inefficiencies. To purchase an insurance plan, you normally have to arrange for a broker to meet you, prepare an unwieldy amount of paperwork, and wait for the bureaucratic red tape to churn its wheels.

The entire process is frustrating from a consumer standpoint and expensive for insurance companies too; broker commissions can eat into premiums and the process is only scalable by hiring a greater number of agents.

In 2016, a total of $5.1 billion in non-life insurance premiums were solicited via brokers, agents, and bancassurance channels. Precise figures for online distribution aren’t available, but the channel did grow by 25% as compared to 2015.

One of the startups that’s trying to simplify the insurance acquisition process is Frank. It offers motorcycle, car, and travel insurance direct to consumers in Thailand via its website. Consumers apply for their insurance product of choice, receive an instant quote, and for certain products, can have the policy in a few seconds. It’s fairly hassle-free.

Frank’s co-founder Harprem Doowa admits they’re still a small player in a very “traditional industry” but he affirms their product is largely positioned towards millennials and future Thai generations who are far more comfortable transacting online and will continue to carry these preferences along with them.

“This will take time,” he adds, referring to overall adoption of Frank’s product.

Harprem ecommerceIQ

Harprem Doowa, Co-founder and MD of frank.co.th

Innovating the insurance value chain

Another key challenge for Frank is ensuring that all parties involved in the transaction are equally adept and comfortable with technology. At the end of the day, it’s another distribution channel and isn’t inherently marketing its own product.

Frank’s policies are underwritten by companies like Bangkok Insurance and AXA – large, unwieldy, and geriatric organizations resistant to systemic change and constant reinvention.

“Insurance companies themselves are still not ready with the backend to underwrite policies immediately. Most still require manual approvals,” explains Harprem.

Another problem is that many potential customers opt out of the process because they’re unfamiliar and uncomfortable with scanning and uploading documents. They require the support of an agent or customer support advisor to complete the transaction – driving up costs and somewhat negating Frank’s value proposition in the first place.

The third aspect hampering progress in insurtech are Thai regulations: Harprem explains that while they protect consumers, there’s a real bottleneck towards online conversions because of the multiple in-person verifications required.

Value-add Partnerships

The fledgling insurtech company has experimented with a number of ways to make it more visible and enticing to customers. One of these is partnerships with popular ecommerce players like Lazada, Grab, honestbee, and foodpanda.

ecommerceIQThis may seem like a contrasting list of partners – how does quick food delivery equate to online insurance? – but Harprem is upbeat about the benefits its brought to the table.

“Doing partnerships with many companies increases our exposure 30X and when [consumers] go and search online for insurance, they see Frank. It wouldn’t be the first time and therefore they are more likely to buy from us,” he explains.

That’s a critical takeaway – startups aren’t flush with the kind of cash that large organizations have, they have to stay lean. By leveraging relationships with online companies, even something unsexy like insurtech can be galvanized into a winning brand.

“The more customers see your brand, the more likely they are to buy insurance from you at a later stage,” exhorts Harprem.

Where do the opportunities and threats lie?

Of course, it’s possible that large insurance companies eventually sidestep players like Frank and start selling direct to consumers via web channels but this will involve channel conflict.

Specifically, it will alienate the vast number of brokers who currently provide the bulk of insurance revenues. Another complication is the sheer time insurance companies take to make decisions, hampered by bureaucracy and lengthy internal approvals processes.

Harprem says the team is completely aware of this but isn’t overly worried. Frank’s nimbleness means it can continue innovating and pivoting as and when the need arises.

“It took one of our partners two years to update their home page.”

There are two additional areas which, if done right, could provide considerable value in the coming years. One is ‘microinsurance’, or insurance for low-income households that provides protection for health risks, property damage, or other specific perils.

Harprem says there’s definitely a business case for it in Thailand but adds that it’s not a priority for Frank right now.

The other opportunity is changing fintech from just another distribution channel to overhauling the entire product in itself. That’s where technologies like blockchain have the greatest potential.

In Singapore, this is already becoming a reality. Electrify, which allows users to buy electricity on the blockchain, closed a $30 million ICO yesterday. Insurtech company PolicyPal, which is powered by blockchain technology, allows underbanked consumers to purchase products like agriculture, property, life, and personal insurance.

“This, in my humble opinion is true fintech,” says Harprem.

ecommerceIQ, together with Sasin SEC, created the Leadership Ecommerce Accelerator Program (LEAP) to provide the fundamental knowledge and skills needed to successfully run an ecommerce business in the world’s fastest-growing market.

While buying search keywords and having attractive content are almost crucial for modern-day marketing, quite often companies ignore an equally important aspect of content marketing/communications – Public Relations.

During this week’s class, lecturers unveiled effective ways to increase brand awareness using the media with ‘smart’ communications and how to achieve positive unit economics.

1. Treat media relations like dating

CYNTHIA LUO, ACOMMERCE HEAD OF COMMUNICATIONS AND ECOMMERCEIQ PRODUCT MANAGER

Not all companies can afford to have a communications team but this doesn’t mean they should neglect  “free publicity”. According to Cynthia,

“You, the executives, are the walking-talking mascots of the brand. If I run a Google search for your name, what does the audience learn about you?”

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Cynthia Luo, aCommerce Head of Communications and ecommerceIQ Product Manager

To make things easier, she compared the procedure of creating a relationship with a media to dating and baseball games.

  • Home Base: Similar to dating, you want to get to know the person that will be eventually writing about you. With journalists, introduce yourself by reaching out on Twitter or email, something as simple as complimenting their work. Twitter remains a popular social media platform among journalists.
  • First Base: Establish meaningful conversation. It can be done by finding out what the journalist is interested in, tweet interesting articles to them and ask for their opinions.
  • Second Base: Getting “physical”. With journalists, initiate a meet up, this can include a media visit to your office and/or a press event. This is also where a press release with newsworthy news should be shared.

Below are some headlines that typically make news:

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  • Third Base: In romantic relationships, it can be healthy to be exclusive. When your news is published, make sure you don’t damage the relationship with the media you created.

Common mistakes that would irritate journalists include spamming their inbox, using an unnecessary amount of buzzwords, and a delayed response to requests for comments.

2. Positive unit economics is the only way to be profitable

MICHAEL CLUZEL, EATIGO CO-FOUNDER AND CEO

As a marketer, economist and founder of the popular dining application, eatigo, Michael doesn’t believe in businesses that don’t profit.

LEAP startup course

Michael Cluzel, eatigo co-founder and CEO

It’s common for a startup to depend on investors for financial injections but a startup should eventually be able to survive on their own if they choose to ‘break free from the aquarium’.

“Startups need to be independent from investors. Instead of relying on external financial sources, create your own source of income and be profitable.”

How? Ensure that Lifetime Value (LTV) is higher than Customer Acquisition Cost (CAC) is reduced.

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3. Student case studies

SHEJI HO, ACOMMERCE GROUP CMO

The insurance sector in Thailand is the second largest in the Asean Economic Community, and accounted for 5.5% of GDP in 2016. However, direct premiums purchased through online channels have a YoY growth of 25% in 2016.

The students wanted to know how could they launch financial services online successfully and  what kind of marketing tools could be best leveraged?

According to Sheji, the real opportunity in this industry lies within the product, not distribution channels.

LEAP startup course

Sheji Ho, aCommerce Group CMO

The local market is already saturated and mature with many fintech players moving into the space. What is missing is actually the innovation of insurance products and pricing.

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“There is wide open space to disrupt this industry as you can create micro-insurance products to sell online.”

Traditional companies should look to China for examples of different types of financial products such as insurance for kidnapping, mobile phones, ecommerce returns, etc.

The next class in the 10-week program is on Thursday October 12th and will take a look at the fundamentals of app marketing, as well as learning from an omni-channel case study of Central Online. Stay tuned for next week’s takeaways!

[LEAP Week 1] eIQ Insights: The New Ecommerce Opportunity in Thailand

[LEAP Week 2] eIQ Insights: Refinement of an Ecommerce Channel Strategy

[LEAP Week 3] eIQ Insights: Market-Product Fit First Before Anything

[LEA{ Week4] eIQ Insights: Central Marketing Group’s Shares Phase II of Digital Strategy