The Asia InsurTech Podcast spoke with Mario Berta, the Country Managing Director for Igloo in the Philippines about micro insurance in emerging markets and the potential for new insurance solutions in the Philippines.
Find the transcript of our conversation here:
Michael Waitze
Okay, we are 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 entrepreneurs, thought leaders and investors a platform to discuss how technology is reshaping the insurance industry in Asia. Today, I’m joined by Mario Berta, the Country Managing Director for Igloo in the Philippines. Mario, it’s great to have you on the show. How are you doing?
Mario Berta
I’m great. Thanks, Mike. Good to see you again.
Michael Waitze
It’s great to see you again, as well. I’m telling you, I saw your name pop up on my calendar and I like I definitely know that guy, where has he been?
Mario Berta
Always in development? I never hid anywhere, always always in development.
Michael Waitze
That’s for sure. Look, before we get into the main part of the conversation, what do you think is the biggest trend in insurance and InsurTech in the Philippines? And I would say by extension, the rest of Southeast Asia?
Mario Berta
It’s an excellent question. So I You’re right, that the challenges the Philippines is facing them as insurance is pretty much the same challenges that you know, the Southeast Asian country are facing, which I’m not gonna say anything new. It’s micro insurance, right? So the Philippines as very low penetrated in original insurance, but very highly penetrated on micro insurance, I think would have been second country in the world on micro insurance penetration. And by secondary I mean, 25%. So not even great, right? So I think the real disruption is happening, thanks to company like us. And there is a number of players in these industries in this region that do kind of things that we do. And the answer to that will be having traditional product, let’s say personal accident, but sold and distributed in a very innovative way. And I’ll go into that in a second. And bring into the market, very innovative product, which are solving Filipino or slash Southeast Asian problem, which is strictly related to this part of the world.
Michael Waitze
So many things to unpack there. Before we get to that. For some of our listeners that may or may not know you, why don’t you give us some of your background for context?
Mario Berta
Yeah, sure. I mean, I’ve been in Southeast Asia, specifically Philippines for about 11 years, I think I’m entering the 11th year, I’ve been based pretty much everywhere between KL, Jakarta and Manila. I just haven’t lived in Vietnam. But besides that, Singapore, Hong Kong, I’ve been extensively in in this part of the world. It’s always been the most exciting regions in the world, facing some issues right now because of pandemic but who doesn’t? Right, but I remember landing to Southeast Asia, Kuala Lumpur, specifically, like 11 years ago, seeing the Petronas and hearing just construction working 24 seven and boom, boom, boom, boom, boom. And I was basically a fresh graduate back then, on my first international job, and I was looking at the sky. I said, Jesus, I want to be here for the next time now. And 10-11 years later here, I am still still there.
Michael Waitze
What were you doing? Like I don’t even remember why you came to Asia? Yeah. If you said your first job, were you employed by another company? Or you just come here? Yeah. You just said
Mario Berta
yeah, so I, after my master and imagery that IE business school, I joined a consulting agency specializing selling branding campaigns to governments and state owned enterprises across the globe. So we were the one helping Malaysia with that one Malaysia slogan 20 years ago. No, no me specifically that company is the one that 20 years ago help the president back then of Malaysia helping we won Malaysia. We were the one that helped Philippines with it’s more fun in the Philippines, slogan, these kind of things, yes, these kind of things. And, and my very first decision for this company was actually Papua New Guinea. I’m not sure if we put this into Asia, for sure it’s not Southeast Asia. And then I went to Nigeria, Angola. And then finally I arrived to Macau, Malaysia and the Philippines. So I landed in the Philippines about 10 years ago. And after that, I joined a big telecom company as sales director in Hong Kong for a year and then Rocket Internet approached me, they were launching a number of ventures. Some of them were really mature like Lazada and Zalora and I decided to pick one that I could start from scratch. And I been the managing director for Easy Taxi regional in Southeast Asia for three years. Then I built my own business candidate, typical Rocket path, you know, a lot of rocket guys then they build their own businesses. If you look at it, all the unicorns of Southeast Asia have a rocket guys somewhere into either as a founder or as a co founder or as an intern doesn’t really matter but they have had some rocket guy around too many sometimes and and then you know Igloo approached me with this opportunity and I found this super interesting and super disruptive the idea of insurance, micro-insurance innovative insurance product into into Southeast Asia so here I am still learning still learning.
Michael Waitze
What are some of the takeaways from your venture into Easy Taxi which was anything but easy to be fair. right I’m really curious because I remember when Easy Taxi launched in Thailand and obviously in Southeast Asia as well and you know back then Rocket was kind of like this monster that was coming out of nowhere and the idea was oh, here’s another thing that’s going to be a unicorn kind of feeling right but that didn’t work so now what understand what was learned by that right because everything’s not perfect? Yes.
Mario Berta
Yeah, so I can only speak up to the point I stayed at Easy Taxi I can tell you you know, me and my colleagues we started from scratch so I was employee number one of Easy Taxi Asia and we scale the business from zero to we had about 400 employees across all across all the countries and we were really competing head to head with Grab back then. Right number I don’t I don’t think we were neither better or worst I think we’re just just as good as Grab back then. Uber I believe was a bit far behind because he was an American company. Very successful but was not really adapt for Southeast Asia. A very simple thing. I can tell you one thing that was critical, right? So Uber always work only with credit card you could only use Uber if you had a credit card. What’s the problem in Southeast Asia with that? Nobody has a credit card right? Although uses yeah what it means is that if you look at credit card penetration Singapore is under 10%. So the real the real biggest market Indonesia, Philippines, Malaysia and so on. But there was no credit cards so for Uber itself was difficult to actually like work. Everybody knew Uber because it makes so much press but nobody could use it because they don’t have a credit card. Right? So so i think is what’s critical on how he’s attacking Grab like jumpstarted much faster than then Rob and I remember going out you know, a taxi garage at 3am in the morning in Manila or Jakarta trust me is not the Shangri La right so and the problem we’re facing today with insurance which is you know low penetration was back then the same problem that we were facing with the taxi there was zero smartphone penetration zero mobile internet penetration to the driver right? So we have to solve that problem and they are we solve it in a number of very creative ways and and it was just an interesting experience.
Michael Waitze
Yeah, really, really interesting experience and a good case study on like, how to learn about building a company from scratch. We’ve had Igloo and Axinan depending on you know when we were having them on we’ve had them on the show a bunch of times, so we kind of know the company really well. What was it about Igloo that was so interesting to you to make the jump from your other company and some of the other stuff you were doing into the InsurTech space?
Mario Berta
Yeah, well I I exited my business in December as a CEO I hire a CEO to run the business now I’m just a minority shareholder I’m just a passive passive shareholder. Well, I think there are a number of things so insurance I think with a number of other industries it is the next big thing for Southeast Asia. I mean if you look at e-commerce space it’s very mature you have two to three players in Indonesia we have even more than that and it’s a game $4 billion companies are you better don’t even try to join the game it’s Champions League already, right? So so if you want to start a small ecommerce company, you much better buy houses rented out, that would be my suggestion. A number of e-commerce enabler which you know they work underneath e-commerce which are which are doing very well and we that’s a separate conversation. So I think also real estate, it’s it is an interesting vertical, it’s what I built my previous business. So I’ve done that, been there. And I remember that, you know, was was intriguing for me, the only thing I knew about insurance that I know nothing about insurance. That’s the only thing I knew about insurance outside being a consumer. So I think the approach of us as blue which we have a good mix in terms of you know, insurance expert, the veterans insurance business, but then, you know, product driven people that you know, maybe they prototype insurance, maybe they prototype the transit transit system, I’m going to get to that in a second because then iinnovative product bring into the market. So So as a team we have a good mix of insurance experts because you have to do it, you need to have an insurance background in order for compliance, which is heavily regulated industry and so on. But then we also have, and that’s probably where I come in. A more sales driven problem solving approach kind of people where, you know, we’re looking to a country will look into an industry of looking to a company says, Okay, how can we solve problem for these guys and apply an insurance around it? Or how insurance can be an additional revenue stream for these guys? Or how insurance can help customer engagement for this guidance?
Michael Waitze
So talk to me. So you brought up a whole bunch of really interesting things? How can it be an extra revenue for somebody? So you’re presuming that that revenue, or at least you’re making it sound like that revenues not going to a traditional insurer, reinsurance another person, maybe they can do it? And you talked about innovative products? And also innovative distribution? Can you get more specific, because let’s start with the distribution part first, maybe or either one that you want. But both these things are really interesting to me. What is the innovation in the distribution and product side?
Mario Berta
Yeah, so for instance, we are not a consumer facing brand, necessarily, meaning we have an app into the markets, it’s the IIgloo app, and this only has one product, which is our gadget protection. And it’s very innovative what we did. So if you download the app, you want to insure your phone, so you download the app, and it is a secondhand phone, by definition, because you already have it, you’re not buying it at the moment, right. And our app is able to detect your phone model and your ima. And then if you are insuring your phone, we need to be make you we need to make sure that you’re not insuring your phone, which is already broken. Otherwise, you try to abuse it, right? So we ask you to take a selfie, literally a selfie in front of the mirror with our app, and our algorithm can scan the photo and detect phone screen cracks automatically, right? So so that’s a very innovative, it’s our pattern technology, we’re probably the only one in Southeast Asia that has this sort of technology. So that’s our only consumer facing product. But we have a number of partnerships across Southeast Asia, the one I can disclose with actual brands is places we Bukalapak in Indonesia. Now if you buy a gadget or a phone with Bukalapak in Indonesia, you will have automatically a pop up popping up at the checkout point where it says okay, you buying an iPhone 10 you wanna buy an insurance for an iPhone 10? If you check the box, it is our it is our system technology, which is providing the service and the customer, the consumer, it is insure for that person, that specific product in a matter of minutes.
Michael Waitze
And does Bukalapak take some revenue from that as well? So they’re just some commission or some discount?
Mario Berta
That’s correct. So that’s, that’s, he’s not exactly an agent is just sort of referral fee. But but that’s a perfect case of additional revenue stream for for somebody else, you know, so does digital goods attach to physical goods and an e commerce make extra revenue out of that? Let’s look at like the airlines that are attaching your travel insurance when you’re buying when you’re buying a trip, right. And we applied that same model into hundreds of categories into 1000s. of transactions.
Michael Waitze
And how about in the Philippines? What are some of the innovative products in the Philippines that aren’t necessarily appropriate for other countries? And I’m really curious about how sales is different there.
Mario Berta
Yeah, so I think we don’t have a product which will be unique to the Philippines. The uniqueness is one the underwriter because for regulatory frameworks, it has to be a Philippine insurance. So you cannot underwrite something offshore. Right? So if you providing an insurance into the Philippines, you have to be you need to have a local underwriter the actual underwriter okay. We are about to launch and when I say about to launch is a matter of days very very proud with the Gcash and which is a online retail fraud where you are a Gcash consumer you can avail of the our online retail fraud program. And once you get it covered and you get covered in a matter of minutes or while you just need to answer some question on KYC. In a matter of minutes, you get the certificate of coverage from our system with a local underwriter and and that means that if you do have transactions into let’s say Lazada or Gcash or anything which is related to e-commerce in the Philippines, and a fraud happens, meaning you know, you put your credit cards and somebody in that transaction still your credit card numbers and buys a million pesos worth of goods or you bought something from a fake merchant. The goods never arrived but you actually been charged as long as you can prove it you get your money back. The product doesn’t exist. It did not exist. We designed. Right, right. Nobody else in Southeast Asia had this kind of product is Do
Michael Waitze
you also have a partnership with Phil Insure? I think that was announced in February of this year. And how does that work?
Mario Berta
So that’s the line of business where, you know, Phil Insure it is one of the biggest brokerage, insurance brokerage in the Philippines. Yet insurance, per se, it is a heavily paper based industry. So that’s where we come in. And so we are digitalising a good percentage of business of Phil Insure, you know that we streamline processes with our technology.
Michael Waitze
Got it. Okay. Is there a way to use companies so outside of the Philippines, and in more developed insurance markets, you have this thing called bancassurance, where banks themselves are used for insurance distribution at scale? Is there a way to use a company like Tonic Bank, which is a neobank, digital first, to then also work with them and the team that Greg has put together to distribute through them as well?
Mario Berta
Yeah, absolutely. We do. We do that with a number of banks already in Southeast Asia.
Michael Waitze
Are those mobile first as well.
Mario Berta
No, are mostly traditional bank, which have internet banking app. Right. We work. Specifically in Southeast Asia, we working with mobile only, let’s say healthtech companies, right? And specifically, say in the Philippines we’re talking to, it’s not close agreement yet, so I can’t disclose it. But we are in the process of studying, you know, you download this healthtech company app. And through this health tech company app, you can order medicine at the drugstore. Right? And we will be attaching you to that transaction, the possibility to buy hospital cash insurance.
Michael Waitze
I understand. There’s a company in Dubai that’s called Democrance. And one of the things that they did that I thought was kind of cool is they partnered with a payments company, right? Because as you know, the Philippines overseas workers send back literally billions of dollars every year into the Philippines. It’s almost like an unknown number. But it’s big, right? And at that point of sale, they offer insurance to their clients. So I was thinking Ayana, which I’m sure you’ve heard of, yeah, and by Mikko Perez, also has kind of a unique payment system where people in the big cities can send money back to the provinces into the countryside. Is there a way to build micro insurance into that as well and partner with a business?
Mario Berta
We we already are not specifically with Ayana, but we know there are a number of remittances company.
Michael Waitze
Yeah, and how does that work? In other words, how does financial literacy come into play? In other words, some people in the province may not even understand what that what insurance Yeah, right.
Mario Berta
So let’s let’s take the case of remittances cross border right so Philippine and Dubai and Dublin, Dubai get entered into a Siwon earlier store, which is the so the biggest Pawn Shop chain in the Philippines is simple and earlier, they have outlets in Dubai in California, wherever they are FW are present. So no FW in Dubai enter as a sub one earlier Dubai branch and it wants to remit money. Siwon earlier is actually presenting to the opportunity to the FW to attach an insurance product to that remittance by an insurance product is not covering the FW is covering the beneficiary right of the remittance, right. So in that case, the financial literacy is not necessarily towards the beneficiary, it’s towards the payer, is the person that pays they understand the value of an insurance product and purchase that on behalf of the loved ones. Right? Right. So that’s where we focus the marketing on.
Michael Waitze
Interesting because to change that metric, right of low penetration, and not just in the Philippines, but throughout the whole region. A lot of people talk about financial education and financial literacy, right. So being able to teach people about what these products are so that they understand why they need them. Obviously, the starting point is with the people that have the money and that are sending it to somebody, not the recipient, but at some point the recipient as well. Again, as GDP per capita grows one of the things that Greg told me from Tonic Bank was that as GDP per capita gets to about 3500 bucks per person. People start getting more financially literate because they have to protect.
Mario Berta
Is that fair? Yeah, sure. It’s fair, I wouldn’t know that the threshold I’m sure the guy from Tonic will be more knowledgeable than me on that regard. But so one is for sure is its income. Second, imagine we are in the middle of a pandemic, and yet somebody dies of COVID or hospitalized of COVID. And in the Philippines, you can get a million pesos that if you get hospitalized, right, so we have a hospital cash product into the market, which is very simple. As long as you get to hospitalized and you can prove it. You get your money back. That’s it. No Asterix No small letter no apostilles. Right? So these are the, these are the innovative way which you know, hospital cash has been there forever. It’s it’s an old product, but we productize it in a very innovative way that you know, even not necessarily financial literate people can get it.
Michael Waitze
Right. Yeah. And just to get back to this tipping point of 3500 bucks, I just, again, I just typed into Google, because it’s there. And I can’t help myself. The GDP per capita in the Philippines as of 2019, was $3,485. So it’s got to be at that tipping point now. Yeah.
Mario Berta
And, yeah, it is totally at the tipping point. There are a number of processes that still lacking like payments, recurrent payments, for instance, we have a lot of products, which you technically sign up for a year, but you get charged every month because of disposable income. Right? So we noticed that, you know, micro insurance is the typical case. And also, you pay more for less, meaning you get any coverage for 12 months, right. But as you get charged every month, we are kind of obliged to slightly higher the premium, because we have processing fees, and there isn’t a hauler chain network, they need to benefit from that transaction. So unfortunately, people that are taking a 12 months coverage, but then they can, they can only pay every month, they will be affected by a slightly higher premium. But it does work because people don’t have the the monthly disposable income to to get to pay for the whole year. Right. So that’s the only way to do it. That’s another innovation that we company like coming into the market.
Michael Waitze
Interesting. I want to back up a little bit or maybe just move up to a slightly higher level. You’ve been operating in the startup space in the Philippines for a long time now. And I think it’s a market that a lot of people don’t really understand. I’m curious if there are any idiosyncrasies there are any nuances there that would be interesting to people just about the startup market itself?
Mario Berta
Yeah, I mean, I think the regional media like e27, Tech in Asia and so on, they vastly covered those those questions. Me as an outsider, because ultimately, I’m a foreigner. But I’ve been there for 10 years. I think it is, it is difficult to break it down in McKinsey, way where I can give you the SWOT analysis on certain things. I think there are a number of cultural factor, which combined with a number of economic factor, right? So for instance, as you know, Philippines telecom are expensive per gigabyte. It is the most expensive in Southeast Asia. Yes. Okay. It is two telecoms only operate in the Philippines. Malaysia has a quarter of a population of Philippines and it has four times the telecoms of the Philippines. Right? We can get into the why. But I can also tell you this, I’ve been involved with one of the telecom for a very long time. And yeah, sure, there are inefficiency in the system. But you also need to consider one thing, Philippine has 7000 Islands, and is subject to earthquake typhoons like no one, nobody else into Southeast Asia, right? So that doesn’t help the capex of telecoms, right? I mean, every time there is a typhoon, the towers get destroyed, and we need to build them again. So so that’s a factor in nobody takes into account, they just complain with the telecom, the telecom are just not good, right. But they don’t take into account that the telecoms face, geographical and geothermal challenges that only the Philippines has, that impacts internet penetration, that impacts technology companies to happen, right. So that’s one, second is pretty much the same is in a lot of countries, like Indonesia, but I think it’s particularly true in the Philippines is that we have the conglomerate phenomenon. So you have you know, five or six conglomerates being in 20-25 Industries, mostly having either monopoly or duopoly in those industries. So that kind of makes it difficult for small startup that then they should become big to to grow, right? They’re trying to find a niche, but a niche is pretty much I mean, if you look at Ayala, for instance, which is it’s a great it is a great conglomerate, you know, across span across multiple industries, through their subsidiary globe into their facility Gcash that the biggest wallet in the country into Gcash, they enter a number of spaces, which means it is very difficult for a bottom up startup to enter that space. Right. And then lastly, but I think this problem is diminishing over time is access to capital and that’s a common problem. I think it’s self explanatory, right? So we don’t really have a Filipino venture capital. company. We start to have one now which is the former guys Grab. So they they are building venture capital together without an entrepreneur. And I think this is the best way to do it. Like, I noticed the painful situation of going through venture capitals, which are run by former investment bankers, instead of venture capitals run by former entrepreneur, there’s a tremendous difference into into Deborah. No, but both models can work. I think both models can work, right. But But I think my personal view is that I just have a better experience in dealing with venture capital, which are run by from entrepreneur versus venture capital, which are owned by former investment banker.
Michael Waitze
Yeah, and I think that explains itself. But just to be explicit. If you’re dealing with an investment banker, who tries to be a venture capitalist, you’re dealing with a guy or a gal who’s never built anything from scratch, but things they have. And if you’re dealing with a venture capitalists, who’s an entrepreneur, now you’re really dealing with someone who gets the struggle and actually can ask you the right questions, because they’ve been, they’ve been in your shoes, they follow the same feelings that you have.
Mario Berta
Yeah. I mean, that’s just I wanted to say it. It’s not for me to say that, have you said it? So I checked, we checked the box,
Michael Waitze
I can say whatever, I want to come out of an investment bank. And I know the feeling of that you know what it’s like to build something and you have no, idea. And I want to say this, too. I think the insights that you gave on the Philippine market are really interesting, because I don’t think a lot of people consider that. And to be fair, I don’t think that the media that you referenced actually covers that type of story in depth. I don’t think you can read about the fact that the Philippines says how many islands you said 7000?
Mario Berta
7300 with the high ties.
Michael Waitze
Yeah, so 7300 Islands. And that also one of the reasons why if you think about it, that there are only two telcos is because the capex is so high. And it’s not a one time only deal. In other words, in Thailand, you have three or four telcos. But if you put up a tower, it’s probably stays there forever. Yeah, the only real problem is do I go from 4g to 5g 5g to whatever’s coming next was in the Philippines, every time a typhoon or something comes through, you reference zeros, you just run the risk of having to put it back up again. So who wants to make that investment 17,000 times and, and again, across multiple islands. And I think that kind of insight is something that people really don’t know. But also, and I think this is really interesting. In the Philippines, as you said, access to capital. It has to happen at the earliest stages of investment, right? There have to be like angel investors to take some really big risks at the beginning, and then move up the move up the scale to seed stage, investors post seed series A Series B. and building that out takes time, we’ve seen it take time in Thailand, and Indonesia and Malaysia, in Vietnam, in Singapore that is pretty much built out. But even a couple of years ago, you had people like Asia ventures saying there’s a Series B and series c gap, which we have to feel,
Mario Berta
You know, right now, I think this is vastly understood that acknowledge in Southeast Asia, I mean, if you look at the reports of the sale of venture capital I deal a lot is Golden Gate venture with Michael lens. And my colleagues, it is tremendous in analyzing data and is very open about it that you know, there is a tremendous gap off a, b and c. I think obviously, the more the more success stories we have, the more will capital will flow. And especially, you know, once the tokopedia grab, say, former employees will leave, they will become themselves have no interest of doing myself because I like building businesses, no, no, no investment businesses. But but it is already happening. Right?
Michael Waitze
And I want to corroborate this idea. Michael Lynch is brilliant, and really great at analyzing data and the Golden Gate team has actually been as a team has been very successful. So well stated. Okay, I don’t have anything else. It was great to talk to you. I really appreciate you coming on and doing this. You always have kind of like a different view on things. And I love getting those views.
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