Hong Kong-based digital insurer Bowtie recently decided to do its part in narrowing the protection gap by reducing the prices of premiums by up to 50%.
According to Bowtie co-founder and co-CEO Fred Ngan, there are many insurance companies in Hong Kong, so it was surprising that the market still had a HK$6.9tn protection gap. “This means that every working adult is facing a $1.9m protection gap,” he said.
Their solution is to shorten the onboarding process and reduce its cost by removing from the equation intermediaries such as insurance agents. The processes of explaining to customers in detail the policies and benefits, applying their insurance for them, and assisting them with their claims usually take several days or even a week.
Bowtie also employs a self-serve digital platform, where customers can access all the products and pricing information. Without agents and commission fees, the insurer can afford to reduce its premiums.
He said that they can do away with agents as Bowtie is adamant about its transparency. The younger consumers, which is most of their client base, want to understand the terms of their policies fully before buying insurance.
“We’re very transparent with premiums. Customers can access all the information they need for their purchase decisions which is a very important element to building trust,” he said. “Our process is automated. It is a lot more effective and efficient when we use technology to engage customers online.”
Expanding into Southeast Asia
In its last funding round in 2021, Bowtie raised $22.6m in a series B funding round.
The round was by Mitsui & Co., with participation from existing investor Sun Life Hong Kong. Mr. Ngan said they are planning another funding to raise more capital but did not mention when it would be.
The insurer is currently focusing on going beyond Hong Kong and entering other markets in Southeast Asia. Bowtie is eyeing Vietnam as one of the markets it identified that has much potential. He added that they are in the midst of doing research in some SEA markets.
“The fact that the business model worked in Hong Kong, we think we can replicate it. We have been launching some content marketing in different markets as a way to understand the customer demands in these markets,” he said.
He said that with more and more accepting online insurance, he does not see this trend slowing down.
“By buying online, consumers will save money and save time. Right now, in surveys, online adoption is just a few percent. However, if you look at a lot of surveys, especially for the younger generation, at least 50% of them will consider buying online for a simple insurance product,” he said.
Source: asiainsurancereview.com