Why We Invested: Qoala

By Smita Aggarwal & Tilman Ehrbeck

Insurance is a powerful tool to help families and small businesses protect themselves from the financial implications of a wide range of unforeseen events. Consider motor and third-party liability coverage in the case of a car accident, health coverage to help with an expensive medical episode, and crop insurance for smallholder farmers should the agricultural season fail.

In the current pandemic crisis, the nature of underlying risks has obviously changed, but the importance and benefits that risk coverage can provide are highlighted even more prominently. Despite the strong evidence of the positive impact of insurance on family and small business wellbeing, penetration has historically remained relatively low compared to other financial services, such as credit or even savings, in particular in emerging markets. The benefits of insurance are hard to visualize for customers. [click to tweet] Distribution costs are high and reduce the pool of funds available for payout. Insurance companies lower premiums in good times and raise them when people arguably need coverage more. In the analog world of the past, insurance “was sold” by pushy agents, not “bought” by well-informed customers who felt their needs being met.

In the analog world of the past, insurance “was sold” by pushy agents, not “bought” by well-informed customers who felt their needs being met.

As much of our lives are digitizing, this is rapidly changing. Take Indonesia as an example. The country has the largest and fastest-growing internet economy in Southeast Asia. Half of Indonesia’s population is under the age of 30 and owns a smartphone. By 2050, Indonesia is projected to have the third-largest middle class among emerging markets. The rapid digitization of the economy and the post-COVID world presents an opportunity to re-imagine insurance in a country that has less than 2% of insurance premiums as a ratio to GDP, compared to other Asian markets such as India, Malaysia, Thailand which are at 3–5%. Developed countries like United Kingdom and South Korea are above 10% indicating the huge potential for growth in insurance.

It is against this backdrop that Flourish invested in Qoala, an insuretech company on a mission to make insurance dramatically more accessible and thus help people better manage the inevitable risks in their lives. Qoala uses technology and analytics to offer a superior customer experience across the entire interaction with insurance — from initial purchase to filing claims. The company specifically targets the current gaps and increasing insurance adoption amongst first-time customers. It does so by pursuing a three-pronged approach:

• Designing contextual and simple products. Qoala founders Harshet Lunani and Tommy Martin use their prior experience in insurance and consumer internet to partner with over 20 insurers including global players such as AXA Mandiri, Tokio Marine and Great Eastern. In addition, Qoala works with local insurers like ACA, Adira and BRI Life to offer products that cover everyday risks for consumers such as phone damage or loss, e-commerce logistics, bus and flight travel-related issues, and health coverage. The key characteristic of insurance product design is that the risk covered is relatable to the consumers and it has simple to understand terms. Insurance companies benefit from the tech agility of Qoala and are able to accelerate their digital reach into untapped customer segments.
• Multi-channel distribution for expanded outreach. Qoala works with prominent brands and large platform partners such as GrabKios, JD.id, Redbus, Tokopedia to offer bundled insurance at their point of sale and drive awareness about insurance through their consumer reach. Affordable insurance products that are speedily delivered along with the core product purchase helps their distribution partners provide value addition to their customers. In addition, Qoala engages offline insurance brokers and agents through its digital app focussed on enhancing their sales, income and credibility with end customers.
• Digital claims reporting and settlement. Typically, insurance companies see huge drop-off rates in actual claims paid out due to process inefficiencies and the extent of information requested to process a claim. Qoala’s objective is to win the trust of the consumers through a seamless and efficient claims experience that allows customers to simply upload a picture or a video on the app. These claims are filtered through Qoala’s proprietary fraud detection system which utilizes machine learning techniques. Qoala has introduced a chatbot within WhatsApp to report claims, and it also proactively alerts customers when they are eligible for a claim based on detectible information. This ease and transparency for what is usually a complicated process lets users take greater control of their lives, making insurance claims as simple as an online purchase.

Across the key elements of the insurance business, Qoala is innovating to open new, untapped segments of customers for their insurance partners and delivering novel, needed insurance protection to a growing Indonesian population. Qoala processes more than 2 million policies each month, up from 7,000 in March last year. The company’s journey has only just begun, and at Flourish we are proud to support Qoala as it empowers customers to better manage risks and achieve their life goals.