The Asia InsurTech Podcast spoke with Andy Ann, the co-founder of YAS Digital, about embedded, small ticket micro-insurance and how the pandemic has helped accelerate digital transformation of the insurance industry.
Listen to our first episode with Andy Ann in November 2020 here.
Michael Waitze
Hi, this is Michael Waitze, and welcome back to the Asia InsurTech Podcast. This remains 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 globally. Today, I’m joined by Andy Ann, the CEO and co founder of YAS Digital Limited. Andy, it’s great to have you back on the show. How are you doing?
Andy Ann
Good, good, Michael, how are you doing?
Michael Waitze
I am okay. Tell me again. Like what has it been like for you? We haven’t spoken. I think it was like last year sometime. But almost a year ago. Yeah.
Andy Ann
Yes. Almost one year, we’ve been, you know, everyone had been \ locked down for almost a year and a half now. Yeah. So So I think that’s, that’s a well, it’s good and bad and you know why? For for us is, you know, focusing building a business that we can, you know, very concentrate in the past year, because there’s not that much of distraction. We know that we couldn’t fly. So that’s a good thing.
Michael Waitze
That’s a good thing and a bad thing.
Andy Ann
The bad thing is I miss my parents. I haven’t seen them for quite some time.
Michael Waitze
Yeah. I mean, it’s hard for me, like my daughter lives in another country. Right. So it’s impossible for me to get to Japan right now. And I’m always in fear that if I leave Thailand, like I won’t be able to get back in or if I do come back in it’ll just take me months to get home kind of thing, right? Because of quarantine here and all these restrictions and rules. But it’s true in every country. Yeah,
Andy Ann
Exactly.
Michael Waitze
Anyway, why don’t we go back and ask you our favorite question, what do you think the biggest trend is in InsurTech in Asia right now?
Andy Ann
InsurTech. In Asia? I think it’s getting really exciting. I see a lot of things happening in terms of investments side. A lot of incumbents, you know, moving into looking into how they can partner with InsurTech companies, and improving the entire process of jumping into customer experience a lot these days, and how they can streamline the clumsy process. So I think that the trend is picking up especially Asia, as you know, it’s behind US. We we see a lot of InsurTech happenings on IPOs. For example, last year, we saw Lemonade this year Hippo went through. So Asia, you know, a lot of the players are spotting for what’s coming up next for Asia, you know, a lot of happenings in the States. But I think Asia, our industry, we focus more on micro insurance. We think that the streamline of bringing smaller bite size insurance plans for the mass market for the underprivileged, and you know, for the untapped market, which has a huge potential. So I think that’s something that’s really exciting.
Michael Waitze
So talk to me a little bit more about micro insurance. Is this a new focus of yours? Or is this something you’ve always had? And one of my big questions, if you have any data on this, I’d be curious. Do you see micro insurance as a lead into bigger policies almost like the the first stepping stone into bigger policies and more traditional insurance for people that haven’t had insurance?
Andy Ann
Yeah, you know what, I think the issue for many of the insurers right now would be tapping into the younger generation, as your know, you know, the millennials, you know, how they see and view in terms of insurance plans. It’s very different from our age, and having micro insurance, I think it’s a really good tap in where younger generations, if you ask them about insurance, they sort of like, you know, no clue what’s going on. But if you ask them Apple Care, they would say, Yeah, I did buy and purchase Apple Care. The reason why because it’s so like, people smile when they buy Apple Care, because they know when they claim for it, they won’t give you a Samsung, right? They know exactly what they’re buying, and then know exactly what’s the risk and what they will be getting out of that. So I think that sort of micro insurance experience is tapping into a new generation where insurance could be as simple as downloading a Spotify or Netflix movie, and you’re protected. So it comes into a very seamless process where you can jump in very quickly and understand that sort of insurance plan, then we can upsell and cross sell in the future.
Michael Waitze
No, so I want to talk a little bit more about embedded insurance right which is essentially what Apple Care is and you’re right. If your mom or your even your auntie, right went to buy an iPhone, and they said you maybe should have some Apple Care. It sounds like a nice thing like a gift we give you kind of. It’s very expensive, I think. It’s wildly overpriced insurance, but in the end, it’s just embedded insurance. Yeah. And have you heard of a company called extend it In the United States, that is essentially Apple Care for everything else. Have you heard of this company?
Andy Ann
Extend? No, I have not.
Michael Waitze
Okay. But it’s the same idea. In other words, what they want is that for any e commerce provider and E commerce seller, to be able to have the ability to have like, Michael care, like if you buy something from me or Andy care if you buy it from you kind of thing, right? Yes, exactly. So they’re building that platform, and they’re seeing ridiculously explosive growth, which means that it means a bunch of things. Yeah, the first is sellers definitely want this. But the sellers want it because the buyers are screaming for it. Yeah,
Andy Ann
Exactly. And for us, I’ll give you a few examples. So recently, we have launched several products, including running, hiking and biking. So embedded, or micro insurance, I think in the future, when you purchase a, let’s say, a Nike sneakers, you don’t want to go and run, maybe it should include 500 kilometers for my first, you know, six months of running, that protects me whether you know, I dropped my phone, or I got hurt, you know, along the way, or is running in rainy days, I think these should be included. And I don’t have to even think, because it is there already. So that that will be you know, something really interesting, for example, hiking as well, because of the COVID. All these hiking and running, the market exploded, we see exponential growth in terms of the kilometers that is being contributed to the market. So our unit size is not based on person, it’s based on kilometers that you have ran, right? So that’s the interesting part where pre COVID, my running kilometers is zero. Now I’m running about 1000 kilometers a year. So I just thought that by if you add $1 per kilometer, we expanding the pie for younger generation market rather than stealing from the pie. Right? Yeah. So that’s sort of a new idea that we have been focusing on.
Michael Waitze
It’s so interesting, I was doing some mentor work for a university program here for Chulalongkorn University, and trying to students were like, what should we build? And I said, I have an idea. Why don’t you build an embedded shirt insurance product, so that when you’re out playing basketball you’re doing you know, you’re going on someplace that there’s insurance included, and they were like, none of us care about, like they just didn’t care because they didn’t get it at all. And now I see these massive companies getting built that are doing just that thing. So interesting. Do you get feedback from clients that are buying this right? These ride, bike and hike insurance? I mean, what are they saying? Are these like, why did you wait so long to roll this out kind of thing?
Andy Ann
Yeah, so it took us like three months to come up with one product. And we have a lot of customers screaming for Hey, we really want it especially for road bikers and mountain bikers. And because our insurance also, you can claim for the bike, not only yourself, you know, that you cannot just claim the bike without getting hurt. Right. So that’s why we see that people wanted so much and they wanted, you know, to purchase a, you know, buy two bottles of Evion the price of you know, somewhere around $3 $4, you’re being protected for your six hours on the road. And I think that, you know, in terms of pricing in terms of the value, it’s adding a lot to the customers, and they maybe they want this more than they want anything else, or for other life or medical insurance.
Michael Waitze
Yeah, I mean, if if the first term that I hear the most is embedded insurance, I think the second term I hear is relevant. And that type of insurance has deep relevance for people that are active, right, there are things you can do for people that aren’t necessarily active as well. But there are plenty of ways to embed insurance. I think the one, not the one, but one of the things that we need to be careful of is that people are opting in as opposed to just getting it without knowing it, right? Because this used to happen in the airline business, you’d buy a plane ticket, and they pre check the box for flight insurance for you even if you didn’t want it or already had it on your credit card kind of thing, right?
Andy Ann
Yes, yes. So that’s why now we work with, you know, both sides, it’s one is educating the b2c market. And on the other side is how we can value add to b2b partners. So these are the two things that we’re working on. And we see the growth for one of our product which is called RYDE it’s a public transportation protection, it protects you with your you know, using your personal belongings up to you know, all the medical claims and that we embedded in the bus drive, bus monthly tickets. You know, if you go on the bus, we work with one of the largest public bus transport company and that includes already. So it’s a sort of gift from the bus company to their customers, you just need to activate the plans.
Michael Waitze
Like who pays for that though?
Andy Ann
The bus company?
Michael Waitze
Wow. And what are the what is the bus company pay for it? Because it protects them if something bad happens?
Andy Ann
Yeah, so there are a few reasons. I think one is because the bus company, they want to show more care to the customers. Now they they use a points to do redemption for the facemask. And they think that well maybe giving the insurance is more friendly than giving out mask more because it’s a physical product that they have to find a spot to do redemptions. Now it’s virtual, it’s digital. So you just need to activate the app and claim but that’s number one. And second, is because the insured the insurance of the bus company, they usually do self insurance, they ensure that the customers themselves. And by partnering up with us, you know, they they have a more one more pot coming in taking care of some of the customers. So there are two reasons, big reasons why they want to partner with us.
Michael Waitze
Very interesting. Yeah, cuz it makes the customers feel more important before the bus company was just taking out insurance in the background. But now they’re saying we’re taking this out for you. And they give it to them. And it feels like a gift is right.
Andy Ann
And micro insurance is good, because we cap the payout as well. Right? So we have paying like maximums, they I think $750 US? That’s a max cap rate. So it’s not about like millions. We’re not talking about hundreds of 1000s of dollars. It’s because it’s micro. That’s why it’s capped.
Michael Waitze
Will you partner with octopus as well. I mean, that has to be a gigantic opportunity just in Hong Kong, right?
Andy Ann
Yeah, yeah, we have been talking to them recently. So we hope there will be something you know, that we can work out. But you know, it’s a long process with such a gigantic company
Michael Waitze
within the company, right? Yeah, but I don’t think this idea of embedding insurance is going to end it’s definitely not going to end this year. It’s gonna be I think it’s just gonna keep going. And it’s gonna be done in some very, very innovative ways the bus thing as well. It’s just it’s super innovative, right? Yes. And you couldn’t do this without technology. Sorry, go ahead.
Andy Ann
And there’s one more really interesting thing, as you know, the bus company, it connects to 230 hiking sites here. So what we’ll do is if you take the bus will also ensure your hiking. Yeah, so so that would be the next wave that’s coming out in the next few weeks.
Michael Waitze
And does it all end up on the mobile phone somewhere?
Andy Ann
It’s on them all on the mobile phone, and we use a GPS to activate the insurance. And I think in the future, what we can do is if you’re with your I watch, Oh, calm, we can activate insurance plans when you’re heart beats reach 140. So that triggers automatically. And you can opt in and opt out. You say okay, every time my heartbeat rates go 140, please help me to automatically activate the plan.
Michael Waitze
But so how do you do that? You check the heart rate monitor, and then you have some. So it’s basically parametric microinsurance? Yeah.
Andy Ann
Yes, yes. I think that would be something really interesting for the future that we can see that’s happening on all the IoT devices.
Michael Waitze
Yeah, I mean, one of the trends that I see in the parametric spaces using third party data just to confirm right so that you can’t get gamed on it. I guess you can do that with health data, because most people aren’t going to game their health data. But it’ll just be interesting to see how that plays out. But yeah, just another really interesting and innovative way to look at this. You know, one of the things you mentioned earlier was how InsurTech are partnering with incumbents. I think even a year ago, they were still this talk from the newer companies that they were going to disrupt the insurance business. And do you see it more now of a partnership plan, as opposed to we’re going to destroy the big incumbents.
Andy Ann
I see virtual banks coming in partnering with incumbents. A lot of virtual banks are now offering insurance as well. I think the reason why is because virtual banks, that you see that they have the digital wallet, they have the customers, they are doing lending, but they couldn’t do big ticket size, like mortgages, right? So essentially, that is, in order for them to scale their business, they have to sell some insurance. So I think that incumbents are partnering with some federal banks and InsurTech to scale, you know, some of the product new products offering to the market. That’s a big trend that I see that’s coming.
Michael Waitze
And how do you look at the investment landscape? Right, I don’t have the numbers off the top of my head, but I think last quarter and in the quarter before that was also globally the two biggest quarters in on record right for investment in InsurTech. What does it look like to you?
Andy Ann
I see it really exciting. You know, it has been quite some time I think since 2016 InsurTech kicked in, and some early ventures you know, they fail to execute in the market. I think that was a little bit too early. And the timing is right now it’s pretty good because now the technology, you know, most of the technologies are available no matter from the AI side or from the blockchain side, or from all the, you know, digital assets, API’s connections. And you see the incumbents and the regulators are more open up. Now compared because of the virtual banks, I think they are more open up compared to two years ago, where everyone still thinking of, you know, they are very satisfied with the existing business, but now because of the pandemic, maybe the insurance are making money, but some of them are you losing quite heavily. Okay. So, especially when you see pandemic happens, and insurance by making money, but what about the agent and broker? You know, what about those face to face meetups? Right? So I think that helps the entire growth and momentum kicks in into the digital side. So that that is really interesting for us.
Michael Waitze
Okay, when you look at the investment landscape, like have you raised money on it, remember the answer to that question?
Andy Ann
Yes, yes. We closed our pre A, and then we are planning our Series A for next summer. Yeah. So right now it’s all numbers coming in. We are activating 600 week over week premiums. Yeah. Or every week around 600. And still growing. So we hope we can hit maybe 1000 policies per week by the end of this quarter. Yeah, so it’s really interesting.
Michael Waitze
You know, I feel like there’s been an attitude change, not only on the incumbent insurance side, but also on the startup side. And I’ll tell you what I mean, you know, over two and a half years ago, in May of 2019, when Theresa and I started doing this, we would talk to people in the InsurTech space, and in the incumbent insurance space, and they sounded like tired. Insurance is horrible. Nobody likes us. This is not a sexy business. I ended up here by accident kind of attitude. And now I can hear in your voice. And I did another recording this morning. There’s like an excitement, you can feel the change in what’s happening in the insurance space based on all the new technology that’s being it’s being rolled out. And I was on the phone, like I said, with an incumbent insurer this morning. And these were like the happiest people I’ve spoken to in days, Do you know what I mean, do you feel the same energy change?
Andy Ann
Yeah, I feel the same. Because let’s say last year, it was really tired for us as well. Yeah. Because no one wants to talk. No one wants to, you know, build new products for the, for the InsurTech, right, everyone’s just thinking of digital distribution, how to lower the cost of Google and Facebook. That’s it. How to automate the process from buy to clean. That’s it right. But now is there there are a lot of incumbents are coming to us, you know, exploring new ideas, thinking of new partnerships, arrangements, coming out with new products, that would be more product relevance to the existing markets and thinking out of the box, they have a lot of support for us as well. So I think that that is a good time for everyone.
Michael Waitze
Yeah, I mean, even when you were explaining to me the embedded insurance on the bus, right where it’s included in the ticket, and the bus company pays for it. It almost sounds to me, like if you gave that roll that job to a programmer to write the code for that, that even that would be fun, right? Because it’s this huge challenge of, you’re not just writing for one device, right? So everybody has a different kind of phone I get Android and iOS are the only two platforms, right? But it’s a big problem. And I remember when I was at when I was still in the investment banking world, and I used to ask the technology guys, like, why don’t you go out and start your own company. And they will always say the same thing to me. Technologists like to solve big problems. And big banks have a lot of big problems that need to get solved and investment banks. And they’re like, that’s why we love being here. Because if we can solve one of these problems, it just feels great. And I feel like the programmers that work with you must feel the same way. No.
Andy Ann
Yeah, for example, you know, we this bus company is 74 years old company. And we are 1518 months old company. And our underwriter is 190 years old company. So for us, we feel good, because you know, like we are solving a problem for 74 years old bus company and we are innovating 490 years old insurance company. And we are here coming in as a tech partner, you know, bridging for their customers and feel good, like everyone’s views, you know, the collaboration. We’re, you know, time for us to put together and it’s only three months we integrate everything end to add.
Michael Waitze
It’s just so cool, right? Because if we think of insurance companies, incumbents, right, as inherently conservative, what do we think about a bus company, but at some level, it must be super cool. You know, if you come home every day as an executive of the bus company, your family says, Hey, Mom, what happened today at the bus stop, nothing changed, you know what I mean? But now what stuff is changing at the bus company because of mobile technology, embedded insurance and all this cool stuff. And then when the younger employees can see that they have other ideas, right as well, other things they can change in this 74 year old conservative company, because now they see, wait a second, we can change the customer experience by giving them insurance. Okay, what else can we do? Yeah. So I had a conversation about a month ago, and we recorded this and we publish this with a guy in Germany. Okay, he’s in the insurance and InsurTech space. And he’s an advisor, good guy. And he just boldly declared on one of these episodes that blockchain is useless for insurance. What are your thoughts on this?
Andy Ann
Well, first of all, I disagree.
Michael Waitze
So did I. On the recording I disagreed.
Andy Ann
Yeah, I’m on recording as well, I disagree, I think I think it will help a lot in the future is we’re just not there yet. It might take another three to five years to deploy, because of data privacy. Because of myself, for example, I have multiple insurance plans. My data is everywhere, right? My data is with you know, AIA or Prudential, Manulife and if I want to change plans, it will take months, you know, for them to get my data from one company to another. Blockchain can totally solve all these issues. My claim records, you know, my data with different incumbents with different InsurTech company with the open API connecting with other banks, right, yeah, a lot of things that we can do, it takes a little bit of time for the market and regulators to come in and understand how blockchain can actually create the value in when it comes to automation and data privacy, I think there’ll be a lot of debates going on, and a lot of collaboration that has to come.
Michael Waitze
I’m curious to get your perspective on this, because I’ve seen a bunch of companies try to do sort of self sovereign data ownership for individuals, right. And a lot of this is focused on maybe your passport number or some kind of digital ID. But this idea that all of your health and insurance data can be owned by you maybe on like a thumbstick somewhere, you know, it has 500 gigabytes of storage on it. So you can have everything there. It’s verified by the blockchain. And when you like you said, when you go from one insurance provider to another, you have all the data you don’t have to wait. When you go to a hospital, even if you’re overseas, and it’s a different hospital, from your normal hospital, all the data’s there, so they know that you’re allergic to penicillin, and all this stuff. Why is that been so hard to build? Is it really just the data privacy side of it? And are you working on any of this stuff?
Andy Ann
Yeah, we have. So YAS, we have our own blockchain that we’ve built in the past 18 months. And we have to educate some of our partners, the underwriters, you know, the claim process that insurance all 40 Because ourselves alone, it doesn’t make sense for us to use it alone. Blockchain is it, the open ledger is for everyone. Basically, it’s for the customers end to end. And for the 40 the incumbents, the InsurTech company, the customers, you know, and the third parties, so I think our responsibility is to basically bits by bits, demonstrate how it can effectively deployed. And it’s not an easy job, because there are many, it’s, we’re not working with just purely startups. And there are five startups we work together, it’s easy, but because these are like 100 years old companies and regulator and just take time, it takes time.
Michael Waitze
Fair enough. So one of the things you’ve mentioned a few times, actually, during this conversation is what I’ll put into the category of financial literacy. Right? Just people actually understanding what’s going on. This doesn’t include just clients, this could be the regulators, like you said, or some of the existing incumbents. How do you tackle as a firm this idea of educating people about what’s going on at scale? And I’m asking because I was surprised to find out again, about a month ago when we had Benny Fajr II on the show from life Powell. They have 4 million monthly active users or month monthly different users that come to their blog every month. They have 500,000 people on Instagram. Do you guys have a strategy as well around blogging and social media and financial literacy?
Andy Ann
Yes, so we’re reaching 300,000 monthly active users on the blog. We write about maybe last year, we had 580 pieces of articles about insurance, and that helped picked up all the key words. Send, you know all the search engines. The reason why we’re doing this is because not only we want to provide more knowledge to our customers and more insights and information at the same time as how we can in the long term, how to lower the acquisition, cost per CPA cost per acquisition costs for how policyholders right because, as you know, it’s really expensive to acquire new customers these days, our job is to add both educate and acquire customers at a lower cost. Right. That’s what we need for the market rather than, you know, blindfold ourselves and keep on paying for high advertising costs. Yeah, we are Ventures we cannot have David Beckham to promote for us right.
Michael Waitze
Touché, no, you cannot. And you shouldn’t either. David doesn’t know the first thing about insurance, although he’s probably a good guy. Yeah. Talk to me a little bit more about customer experience. Why do you why do you think that there’s been such a recent focus on it? Is it COVID It’s keeping people indoors and keeping people away from people, and then giving them the time to rethink the way the customer experiences these products?
Andy Ann
Yeah, so customer experience, you know, we see several things. One is, we want to bring in a lower cost. So people can tap into different products at a lower entry point. So that’s why micro insurance is number one. Number two, we want to you know, make the claim hassle free. So if you do the claim process, we no longer need to go through like net right now. It’s still writing checks, right? In the future, like money gets into a digital wallet. And number three would be like, how can we ease off? You know, the problems with? I don’t know, where’s my agent? You know, my broker, he left the company like, what what’s going on with my policy now. So these are, you know, these are things that we try to eliminate. And what we are trying to improve is we are trying to improve the product, relevancy, number one, right? Customer Expectation number two, and then number three would be our products on demand. It’s like, anytime, anywhere on subscription, you can cancel it anytime you can activate any time, which gives the customers a freedom and flexibility. For example, last year, I bought travel insurance for my entire my family. It’s a wastage right. That’s an annual plan.
Michael Waitze
I’m laughing, but I shouldn’t be laughing. I feel bad, actually. But yeah, it’s wasted. Completely.
Andy Ann
So at the end, we also have one more last thing, which is very important. It’s usually for customer journey of most of the encumbrances to one process was by claim that’s the journey of a customer right experience. But what about buy and not claim? When you buy and you don’t claim you feel good? Is something like the car insurance that no claim bonus thing? How can I get maybe loyalty points, and I can use the points and do something else, right, enjoy a movie show or get a song from Spotify. So these are some of these custom experience that we want to bring into the younger generation as well. And at the end towards the entire customer experiences to have the freedom of choice. Even though you have you don’t have salary, you can protect things that have you’re sort of part of your assets or your your health or your wealth for digital assets. Right? So these are some of the lines that we’re covering?
Michael Waitze
What’s your view on outage insurance, so like real parametric, the internet goes down for two hours, you’re an Ecommerce seller. Or even your like your, you know, your grab driver, right? Or an Uber driver. And you don’t have connectivity for an hour, not your fault. But because some internet connectivity point goes down. What do you what’s your view on in parametric insurance like that we just get compensated because you can’t connect?
Andy Ann
Yeah, we are working on also a venture startup in Amsterdam, what they do is when when, when you purchase some online games, and the internet, you know, conductivity is down, and you’re not able to get it there as a sort of insurance cover. I think these are interesting ideas, but we’re still doing some research and exploration. These are interesting, only, we can get a huge volume. If the volume is big enough, then it will be a very interesting business model. But when it comes to a customer experience, whether they really need it or whether we need insurance coverage, how much for per item, and we’ll be very complicated. Imagine you’re in an E commerce shop, you know, you’re buying things from $2 up to 2000 or $20,000. How can we make the claim process seamless and fair and being able to run all the numbers? I think that would you know take a little bit of time.
Michael Waitze
So think about it the same way you think about your your bus embedded insurance, right? Yeah, where before the bus company had insurance but now they’re giving it to the people that ride the bus. Do you think that there’s a way because phone company Write that haven’t probably have insurance if their connectivity goes down. But why not offer it to everybody who has a phone in the same way that you offer it to everybody that has a bus ticket?
Andy Ann
Yeah, I’m just wondering how can you prove that that kind of activity down, done by natural disaster or whatever, right? Oh, I just turn off my airplane mode.
Michael Waitze
So this is why this is why I was asking this before. There are third party data providers like Casper data house and another company called 1000 eyes that actually monitor all of the internet connectivity points, particularly in major cities around the world. And that’s how you that’s how you judge so if something goes down on one of those things for a consistent period of time that can be measured by third party verifiable data. That’s the way to protect against that, I think, anyway,
Andy Ann
Yeah. I’m thinking maybe, maybe this would be a better business for PDVSA. Yeah, other than b2c? Yeah. Yeah. So as well, yeah, definitely. Yeah, I think so.
Michael Waitze
I was just curious. Yeah. Okay, Andy, that’s it for me. Thank you again, for doing this. You’ve got to come back again. Things keep changing. And you’re great at this. So it’s great to have you on the show. Andy Ann the CEO and co founder. Yas Digital Limited. This was awesome, man. Thank you so much.
Andy Ann
Thank you so much. Thank you
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