EP 113- Julie Kim – CEO SmallTicket – You Have To Jump In, Otherwise You Will Lose

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Michael Waitze has been podcasting with some of the best investors and business builders globally and discussing all things startup with them from an Asian perspective. Michael worked in Global Finance for more than 20 years, employed by firms like Citigroup, Morgan Stanley, and Goldman Sachs, primarily in Tokyo. Michael always maintained a particular focus on how technology could be used successfully to make businesses more efficient and to drive P/L growth. Michael is quite skilled at connecting people and capital to innovative ideas and is a trusted advisor to both investors and founders. Michael is a leader in the digital media space, having pioneered the concept of a podcast network in Asia while building the biggest and fastest-growing listener base in the region. His flagship website, AsiaTechPodcast.com, has listeners in over 130 countries and is available on virtually every podcast player that supports RSS feeds.

Guest
Jung Eun Kim

Smallticket Accenture Sullivan and Cromwell HK Northwestern Univ. School of Law, ALL.M. London School of Economics, LL.M. BPP Law School Ewha Women Univ. LL.B and Master of law.

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The Asia InsurTech Podcast was catching up with Julie Jung-Eun Kim, the founder and CEO at Smallticket to get an update on how the Korean insurance market has changed over the past two years. Just like in other Asia markets, platforms have attracted new partnerships with insurers and Smallticket is offering insurance coverage to food delivery service Yogiyo.

Find the transcript of our conversation below:

Michael Waitze  

Okay, we’re on. Hi, this is Michael Waitze, and welcome back to the Asia InsurTech Podcast. This is the only podcast in Asia focused on insurance that gives our amazing entrepreneurs, thought leaders and investors a platform to discuss how technology is reshaping the insurance industry in Asia. Our guest today, our returning guests, is Julie Jung-Eun Kim, the founder and CEO at Smallticket. Julie, it’s amazing to have you back on the show again. How are you doing today?

Julie Kim  

Hi, Michael, it’s good to see you again. Um, I guess it’s been two years since I was on this podcast, right?

Michael Waitze  

Yeah, I was thinking the same thing. It’s hard to believe that the last time you were on the show was literally almost two years ago. It was June 2019. It just feels like another time.

Julie Kim  

I know. It’s very, I feel very achieved these days looking back. Because we make lots of progress in specially mobility sector.

Michael Waitze  

Let’s get to the mobility sector in a second. But I want you just to update us on because the last time we talked was two years ago. So I want to find out today, if you have like a different view on what you think the biggest trend is, in insurance and InsurTech.

Julie Kim  

So I’m directly saying that I say that the meaning of traditional license does not have so much weight on it. Because in this section, especially, we see that the platform is successfully replacing the insurers role unlikely before. So for example, they are pushed towards digitalization more prevalent since last year, and then they try to mix up the TM channel, and agency channels all together. And then most of those kind of transition, they are looking for another player outside of them, because they knew that they caught it this kind of a big bang of their inside outside it cannot be done by themselves. So that’s the biggest trend that I saw. And I have seen in the Korean market right now.

Michael Waitze  

Yeah, it’s really interesting. How concentrated, I don’t think we talked about this last time, but how concentrated is the insurance market in Korea? In other words, are there like three major companies? Are there 25. In Thailand, were I live there are 70 insurance licenses? What’s it like in Korea?

Julie Kim  

Ah, I don’t say that I’m very correct in counting the numbers of all the insurance companies and nonlife mostly I count like a 10 and then nonlife is almost like 15 something like that. You know, normally we work with a nonlife these days because we provide on-demand to commercial bike insurance mostly. And then especially for the car insurance sector, the major five insurance companies are geared up to enter into new markets. So for example, we launched the Woowa Brothers platform service on demand insurance before and then now we will launch the another one for the Yogiyo which is the second largest actually. Deliveryhero owns them. And then the third is kind of the big movement among the food and beverage delivery platform services is impacting the Korean insurance companies especially the car insurance sector. So these days, they try to catch that cap, they try to catch those kind of clients. Actually, this is the biggest changing that we have noticed. Because in before 2019, we’ve tried to persuade the insurance companies to give that product to provide the product, just to you underwrite and then we will sell it. And then we have the account. That’s our sales logic. But since we launched it on demand the first one, on it changing, they started to look at the platform service providers, and then try to learn how to hold the account up, and then how to provide the customize insurance itself, as well as b2b. So, actually, we our legal position is a agency, but our law is expecting as combining of insurance agency and data management platform and brokerage platform and the platform service provider. So it means they just saw insurance companies really stopped giving more interviews to sales part. And then he started to concentrate on their underwriting part. And then they give other older kinds of work to Smallticket right now. So as we have the Yogiyo cover, or more than 80% of the for the delivery platform service in Korea. So it’s we, we we believe that what we see in the what we provide to prefered services shows the biggest trends in a Korean insurance distribution channel.

Michael Waitze  

How does this on-demand motor service work? In other words, does it mean that when the vehicles are not being used, that they’re not insured? So that the pricing is different? How does that work? And how does it work in conjunction with the data management platform that you were talking about?

Julie Kim  

Yeah, that’s correct. That’s the core of that service as you saw it very correct. But more if I add more than the on-demand means the switch from the domestic use to commercial use. So from the origin, its target for the crowd riders. So it’s just a normal person. But if they want to take a part-time job as getting money by way of delivering food service, and then getting a call from the that those kind of platform, then they will want to get covered by the time they move. So but when before they move for the call, they have to be sure to buy domestic bike insurance, motor insurance, but when they start their delivery service, they have to change to their propose. So we are changing  the coverage of the insurance from the domestic to commercial. And our data tells when he started in the when he’s been issued to deliver service. And we send out to among the circles among the platform or among the client and us in the insurance company. So we share. Yeah.

Michael Waitze  

And how do you do that? Do you use the sort of location services on the phone? Is there some other kind of telematic device? Or is there some switch done on the mobile phone for most users or most drivers?

Julie Kim  

Basically, it’s all by its moving by the GPS. Yeah, so we follow the GPS, and we gather all the data’s in the store. And then we use for calculating in claiming the insurance policies. So yep, the it’s all happening. 365 days and then 24 seven days. And we calculate because on demand, the commercial motorbike insurance itself, it’s very slice insurance, right? It’s very cheaper, it’s very cheap. So it means and the backside insurance companies and the small ticket, have lots of things to do to make a bill. So the small to get made a solution that we can count by every second. So we can count all the delivery service men’s movement by second. Yeah, it gives more correctness, and then transparency to both sides, our clients and insurance company.

Michael Waitze  

I understand. Jill, you mentioned earlier that it took a while for the insurance companies, the underwriters, right to get on board and to understand what your product you’re trying to offer? What do you think changed their mind? Was there a specific event? Was it that one insurance company decided to do it and then another one wanted to get in on it? Like, what changed?

Julie Kim  

Actually, um, yeah, it’s about the numbers actually, the size of the market, because nobody assures about the growth of that market. They don’t believe actually, before they see. And at the same time, they worry about loss ratio, of course, of course, because they can’t presume the size of market. So it means accordingly, they comprehend their loss ratio, either. That’s the biggest perception that we have to came over. So we try to tell them that this is new market, we know. But when we see the trends of the quieter riders growth, you have to jump into it. Otherwise, you will lose, because it’s just gonna say it’s a kind of a big one pie, and then everyone has to eat. So it’s they they are resorted to it from some chairs, right. So but if you want to win it, you have to go first. Otherwise, you will lose it. Because we will make the pipeline to our clients using our solution, then you can jump on to it when you become a newcomer. So yeah, just we say that just give the end. And the next to what we’re trying to say that. Actually, all the risks are falling down on small.

Michael Waitze  

How’s that? What do you mean? So you because risk because you’re not doing the underwriting? But what kind of risk is that?

Julie Kim  

Yeah, yeah. When I when I say the risk in terms of this context, it means that the business risk, now the loss ratio of that product, because it’s a new market, if insurance company directly into that market, that they have to set up their new unit, then they have to do make the task force and then they have to pour into money into for the on the invisible sector. Right. So but they using us, says it in traditional way, we can be the outsourcing or we can be the affinity partner, or we can be a strategic partner, whatever they call, we do our role as agency and the marketing agency and the platform solution provider, and the data monitoring center. So you don’t have to do anything. You just give the job, and then we take on the risk on business side. It’s really yeah, it means that you have to just give the product, that’s all you can do.

Michael Waitze  

In a way, it’s almost like they’re outsourcing their innovation to you, right?

Julie Kim  

Yeah. Yes. I mean, when I say it’ll be this risk, it means that it’s really directly linked to cost, right? So but if you want to take the experimenter on this new market, then you have to worry about the sunk cost. But I always say to them that this is kind of a POC. And you have to take as a test platform. You don’t have to make the budget for us to before you’re inside the talent. Just try out and they’d be worked out really and then you can set up because your base to capture monster right. So because I was very aggressive. Because the car insurance sector, always insurance companies want to step behind. They want to be the fastest learner, not past the challenger, right? So I wanted to the changes come, I want to keep this a new breed, to their business logic on the way of sales and the way of making product, because it will change their perspective to see the risk portfolio of their product. Absolutely. Yeah,

Michael Waitze  

I want to ask you a little bit about this data management that you’re doing as well, right? In other words, for a company of your size, how many people are at Smallticket now?

Julie Kim  

No, it’s 30 people.

Michael Waitze  

30 people is a ton of people? Do you have your own data science and sort of data management and data engineering teams?

Julie Kim  

We can’t say that we have the team, but we have people who take charge of it. And then we have one on data scientist, and the other engineers. Just a few. Yeah, probably will set up properly this year. 

Michael Waitze  

I’d be curious to learn. And you don’t have to go into detail about it if you’re not sort of directly involved. But I’d be curious to learn about how you handle your ML Ops, right. So your machine learning operations, how you set up that data engineering, right, because if you, if you’re running a data management platform, part of the idea is that you have to have data that is clean, that’s consistent, and that you can use the analyze and go back to your insurance partners with and say, here’s what we’ve learned from that. Are you doing some of that as well?

Julie Kim  

Oh, yep, we set up our proposition for the data experiment. And to think with the legacy of the insurance companies and we have had to make our own on and then based on our brother balancing solution, we get our data set, we need an Elisa out, and then we store and then we make kind of framework to to make more efficiency to analyze the details. So now, on the biggest to me, we are at the point of gathering their data as fast in the store, and then we’re trying to make the more enlaces of those data’s to make the better the premium cost in coverage. Yep.

Michael Waitze  

I understand. I think I think data data analysis and data management is one of the hardest problems that a startup company can face, because it’s a little bit of a daunting task. But it has to happen, because that’s a value add that you can offer to your insurance partners, where you get to analyze all this data that you’re gathering, particularly on the sales and on the distribution side, if that makes sense.

Julie Kim  

Actually, um, our problem, there are multiple problem is that the mobility business is growing so fast. So we get we get lots of details from the those on demand. mobility. We get a lot. But to make the data analysis part more meaningful, and the more adoptable to insurance sector, it means the insurance company should be ready for using it. Yeah, but we have the all the details, and then we have our own data analytics. But the other counter, they don’t have any data. They don’t need actually because even if they have the all the data’s into their system, they just use a few of them to make the as the current premium cost, because they don’t have any other data proposition for this kind of new sector. That’s what I found. So it means we have to the data management platform means that’s our direction and then to to achieve those role more perfectly. We have to have a lot of a framework to give the more efficiency and adaptability and to use. But still the counterpart they have to change they have to change more rapidly. Then our data analysis in an arm data’s can be useful to them. Otherwise it doesn’t work. I think the machine learning actually, I think it will take time for the dynamic pricing. All right. The disruptive insurance underwriting maybe on I may be wrong, because I’m not from the insurance company. But when I look at my business, and when I look at the flow of data, it’s from the client side bilaterally, and when I see the store, it means that we have to use them, but we need somebody else to to make to make it useful.

Michael Waitze  

I think this is going to be one of the biggest challenges actually, for not just insurance companies, but for InsurTechs as well, particularly as they provide data analysis to their insurance company clients, their incumbents insurance company clients. And that is gonna need to build out an infrastructure of data engineering before they can actually do the data science that they need to do to be able to provide those proper services. And if you’re receiving a ton of data, whether it’s location data, or timing data, or risk data, or claims data from your drivers or from your mobility partners, your ability to analyze that data, whether it’s in real time, or even looking back, if it’s diagnostic, is going to mean you’re going to be able to provide much better services for them. And if it takes you time to build out your data infrastructure, that’s going to be problematic. And if you can do it faster, it’s going to be better.

Julie Kim  

Of course. And then if they don’t prepare the client side, it will be the will be will ask the same thing all the time. It means the deduction of the premium cost, right? They call the call level up to the level of the customization. Because nobody tries, and nobody knows how to make the data set, adapt, adaptable, to make the customized policies. So it’s kind of this kind of very frustrating way of business among client and broker and insurance company. So

Michael Waitze  

Do you see demand for that? In other words, do you think that both the end buyers of insurance, and also the underwriters and insurance want to write customized and personalized policies, but that they don’t yet have a handle on the data yet to be able to let them do that?

Julie Kim  

To be honest, I think the reinsurance companies, they are more keen, keen on making personalized insurance and before then customizing policies. But the insurance companies they don’t have, they don’t have confidence that much. They can sell plus noise and will customize policies, because they always think of the sides fast.

Michael Waitze  

Right? But that should fit right into the wheelhouse of small ticket, right? Because you’re writing small tickets to do this. That’s got to be key for this personalization, I would think no.

Julie Kim  

Yep. And our vital role in making disruption in this insurance sector. Is that to make flourish, insurance competence, business and client business, otherwise, they will have the chance to think about do how to make the make the digital transformation. So yeah, in that, in that perspective, we think our achievement is these, it’s meaningful to create an insurance market.

Michael Waitze  

Absolutely. And to increasing not the not just the bottom line, but the top line. Right. So opening up new markets and providing new product creation for the insurance companies like you said, They’re, they’re outsourcing that to you.

Julie Kim  

Yes, yes. And yeah, we have also other competitors in market. When heard from the insurance company side and brokers marking and platinum service providers, they said they thought the insure care could just play a role of the white labelling. So it means they get profit from the insurance company, and they just done their job. They didn’t know that there is more behind that front sight. Because we have to ask bill to client and we have to operate our solution to make the contract to constant sustainable. So those kind of a backside word they haven’t thought about them InsurTech can take the roar. So means we are trying to say we trying to give more strong impression that ensure Tech Can, can do lots of work for you.

Michael Waitze  

Right, as opposed to just the white labeling that you’ve mentioned. Look, before I let you go, I want to ask you about something that we obviously could not have spoken about the last time we recorded and that was COVID-19. Korea has done an incredibly great job actually, of controlling the pandemic, but did COVID-19 impact your business? Not just from a lot, revenue perspective, but like from a how you work perspective, tell me a little bit about how that happened. Tell me,

Julie Kim  

I think it changed it. It turns the eyes of the insurance companies to digital transformation is really fascinating. Really fossen. Actually, since I founded my company, this multi kid is thought to start in 2017. The cow bank, right? was the most impressive one impacting to the financial market in Korea. Okay. But COVID-19 is the biggest now I can tell. Because in 2017, even if a cow bank, when came out to the word, the insurance companies in Korea, they thought like insurance still safe, we don’t have to move now we have to prepare slowly. And we have to look at how market goes towards the visitor. They are not in a hurry. But COVID-19 make very, very drastic changes to their perception. So from the last year, all the insurance companies saying that we are making this your transformation, we need the people. And then we need the case. And what else we can do for this transformation. those cases, those kinds of questions, I got a lot and we make a lot of discussions on the app. So COVID-19 means new opportunity to InsurTech. And so in that way, it’s very meaningful to us.

Michael Waitze  

And how about working from home or remote working? Did that impact your company as well.

Julie Kim  

But before COVID-19, we also worked online, mostly using the communication tools and conference calls. So it was fine only for the Christmas party. We had a dream call Christmas party. But now I think I’m no one, it’s a we doing work for the digital transformation, but the achievement should be shared offline. So it means we have to make some time to see face to face. Otherwise, you will lose some kind of very, we can lose some kind of motivation. Why do we have to work here? So this to start are actually the providing vision and enabling the team staff work for those visions. It’s very important that in growing business, but if we want it only if we work in online or virtual space, that it does lose, its losing those kind of strong binding motivation? 

Michael Waitze  

For people that aren’t familiar with what is going on in Korea. How would you describe the current situation about the pandemic, just from your perspective?

Julie Kim  

I don’t know, the government started to provide vaccines, and then some people started to get. And then we are expecting we’re expecting to have more vaccines, more kinds of vaccines. Still, and everyone just  worrying about the fourth pandemic period again, because I just kind of it does not goes so fast, right? It is solely bands. So we wait for the time that we really don’t have to wear the mask

Michael Waitze  

I am waiting for the same thing. Okay, Julie, look, I’ll let you go. I really appreciate you taking the time again to do this. Julie Jung Eun Kim, the founder and CEO at Smallticket. Thank you so much for coming back on the show. We’ll have to get you back on again. So

Julie Kim  

Thank you very much for inviting me and then listening to our case. Yeah, thanks so much.

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