Pioneering Online Car Insurance in Thailand

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In this Interview, Founder of Roojai, Nicolas Faquet, shares his insights on the implementation of online car insurance in Thailand. B2C auto-insurance has great potential to grow. With over 45,000 vehicles already using Roojai’s policies the idea has already been proved.

Keep reading to learn more about Roojai, a online company offering car insurance in a “MGA like” model in the Thailand.

What problem did you set out to solve when you founded Roojai?

Roojai is an online B2C insurance platform operating under a “MGA like” model in the Thai Market. We launched only three years ago, in 2016, and to date we have an in-force portfolio with over 45,000 vehicles. When we founded Roojai, we set out to solve 3 keys problems within the car insurance industry in Thailand:

Provide product transparency to customers. The Thai car insurance distribution is mainly agent and broker driven. They generally sell expensive product features (for example, less than 5% of customers are offered a deductible) pushing up prices, increasing handling costs and, to a certain extent, discouraging drivers from driving carefully. Our easy product customization interface lets customers play freely with the product features. On average, they look at 12 product options before making up their own minds and as a result choose what they really need. For example, 70% of our customers choose a deductible.

Reduce frictional cost. The industry is running with a 40% expense/acquisition cost. It needs a 60% loss ratio to break even. This basically means that for every 1.5 dollars of customer compensation, it costs the industry 1 dollar. Why should a customer feel reassured by that? Roojai, through digitalization of the purchase process, automation of its service and advance use of video, is on a mission to reduce wastage in the industry and ultimately benefit the customer. We aim to deliver a more reasonable 1 dollar of cost to pay out 3 dollars of compensation or, in industry speak, a 75% loss to 25% expense ratio.

Reward safer driving. In a country notoriously on the podium of the most dangerous place to drive with 20,000 deaths per year, something radical has to be done. We strongly believe that insurance can and should play a major role in reducing this toll by segmenting and rewarding better driving behaviour. We are achieving this through deeper behaviour based segmentation, encouraging consumers to opt for a deductible, and promoting technology such as in-car camera. Ultimately, safer drivers pay lower premiums with Roojai.

The most promising trend for us is the explosion of e-commerce. This is always a precursor of the growth of online B2C financial services. Thailand is now the largest ASEAN e-commerce market

Nicolas Faquet, Founder of Roojai

Roojai pioneered instant online car insurance in Thailand. How have you been able to expedite the insurance process? And what challenges has it induced?

For starters, we have leveraged digital purchase and developed a fully transactional website supported by self-service features in “My Account”. We have fully automated our underwriting rules and pricing, allowing policies to be issued in real time. A necessary practice in Thailand is the car inspection prior to inception. We have digitized this complex and costly onboarding process by replacing it with a video call to simplify the customer experience and reduce costs.

We have also pioneered the offer of monthly instalments for customers without credit cards to widen access to better levels of coverage to those who struggle to get credit. In summary, we are leveraging technology to make every single car insurance process simpler and less costly, from purchase to servicing.

Throughout all this, our key challenge has been the development of an extremely effective user interface. In this market, most insurers only price on the vehicle model and year, which makes the quotation process simple and fast for them. For us, the challenge was to keep the simplicity while collecting significantly more data to enable better segmentation and pricing. All this in a market which is mobile only and cannot accept the lengthy desktop based, “dropdown box heavy” process of the insurance websites of Europe/US. We spent the last 3 years improving that process to achieve the desired results. Always focusing on mobile speed and simplicity rather than pure aesthetics.

What are the key changes you have seen in the industry since Roojai started?

The most promising trend for us is the explosion of e-commerce. This is always a precursor of the growth of online B2C financial services. Thailand is now the largest ASEAN e-commerce market with 3.5BUSD in 2018 (B2C only). This is more than double what it was when we started 4 years ago, ensuring a bright future ahead of us. In our industry, we have seen the emergence of start-ups in the online distribution space but most are relying on the back office of established insurance companies. Roojai is one of the very few trying to digitalize the whole value chain, from product to distribution to servicing. We do see traditional players becoming more aware and starting to invest in technology and digital solutions. We won’t have the same head start as some of our European counterparts.

There are so many emerging technologies that appear to disrupt the traditional insurance value chain. Which of them will make the most impact?

We believe and invest in big data and AI. We have designed our system to be able to collect and connect all the data coming from the different environments in which the customer interacts with us (website, call center, Google, Facebook, Roojai App, policy and claim). Analytics then drive all our initiatives from marketing to pricing and process improvements. We have created some AI proof of concepts to further improve speed of service and reduce cost, such as automating claim estimation for small damages. Results are very encouraging and we will be launching production over the next few months before extending AI applications to other services.
We must also point out that the use of video call through our app has allowed us to dramatically improve the onboarding process. This technology keeps a level of human touch and helps customers adopt a fully digital process. 95% of our pre-issuance car inspections are done this way and we are now implementing it for “pre” and “post” survey of car repairs.

One potential threat we see is the evolution towards fully autonomous vehicles (level 5 – removing liabilities from the driver to the software provider) and the change in customer behavior in respect to car ownership. These two technology/evolutions have the potential to disrupt the industry and even more companies like us with a product specialization and B2C only model. While progress is being made towards autonomous vehicles, we believe their adoption as a mainstream mode of transportation is decades away rather than years in our emerging market. We also comfort ourselves that whatever disruption happens, it will occur firstin the US and Europe before it reaches Thailand, giving us the necessary head start to reinvent ourselves if needed. Amazon is not yet operating in Thailand! We are also looking closely at UBI and telematics, but while it is an insurer’s dream, we are not convinced that it will find customer interest in our market anytime soon. We would rather be quick follower than a pioneer in that respect. 

What are your views on the Southeast Asian insurance market? How do you see your company evolving in the future?

Southeast Asian insurance market is an exciting concept but a much more blurred reality, at least as far as car insurance is concerned. The markets are so different in terms of their regulation and stage of development that it reduces significantly the straightforward re-use of our solutions. Malaysia is probably the country most ready for a pure online player, but as long as the pricing is heavilyregulated, we don’t see an opportunity for us. Indonesia does not have compulsory third party insurance, which breaks the compulsory renewal cycle of insurance, shortens the duration of car insurance holding and Point of Sale Insurance (Car Dealer and Finance companies) still have too strong a foothold on the insurable market. Cambodia, Laos and Myanmar are still in their infancy. We do see large potential for the Philippines and Vietnam. Current market size is still too small to support a pure play approach with a reasonable road to breakeven, but at their current speed they are just a few years away from becoming exciting opportunities. We want to become the household name for car insurance and related services in Thailand. Product specialization and market focus is our foreseeable future. We will achieve this through our excellence on
quality of services, advance pricing algorithm and development of complementary offers around
vehicles ownership beyond insurance.

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Bradley Collins

Bradley Collins