The COVID-19 pandemic has created significant demand for health insurance as more and more people fret over meeting their medical expenses. Among those firms making the most of this opportunity is the Thailand-based digital insurance startup Sunday.
Buoyed by a promising growth in revenues and recent fundraisings, the insurtech company, which focuses on non-life health insurance, is planning to expand to Indonesia in the first quarter of 2021, having secured all the necessary regulatory licences and approvals, its co-founder and CEO Cindy Kua told DealStreetAsia.
In H1 2020, Sunday’s revenues exceeded that for the entire financial year 2019. It also expects to clock 100 per cent year-on-year revenue growth this year. “We’re heavily focused on health insurance and the employee benefits market for corporate customers and SMEs, [hence] we were able to meet our revenue targets throughout the pandemic,” said Cindy.
In September, Sunday raised $9 million in a pre-series B bridge round led by SCB 10X, the venture capital arm of Thailand’s Siam Commercial Bank. The proceeds will support its growth plans in Thailand and Indonesia while strengthening its proprietary employee benefits platform and the super app Sunday Service, it said.
So far, the company has raised $30 million from investors including KSK Group, Vertex Ventures, Quona Capital, LINE Ventures, SCB10X, and OSK-SBI Ventures.
Since its launch in 2017, the firm has scaled in health, motor, and electronics device protection, offering services to its direct B2B channel and also B2B2C partners. The company offers its end-to-end solutions via its partners and proprietary distribution channels. Its products include Sunday Health For Business, Motor insurance, Travel insurance, dtac X Sunday, and Sunday FIGHT COVID.
Sunday Health for Business, is currently used by SMEs with less than 50 employees as well as large-scale corporates with more than 7,000 employees. More than 100,000 active members are served under this programme, which is growing more than 100% year-on-year in revenue terms, Sunday claims.
The company’s electronics protection warranty services, meanwhile, cover more than 100,000 smartphones and gadgets.
Sunday’s revenues come from insurance premiums from non-life insurance licensed companies; service fees from electronics protection warranty products; and commission earned from licensed insurance brokerage companies.
Sunday has also invested heavily in Artificial Intelligence-based technologies. “Our proprietary machine learning models power our risk prediction algorithms for complex risks such as health and motor insurance. This allows us to price and develop products,” said Cindy.
Technology is what helps Sunday differentiate itself, according to Mukaya (Tai) Panich, chief venture and investment officer, SCB 10X. “Sunday uses data to power its AI algorithms. These models are used to create personalised insurance products, for individuals and businesses. Due to Covid-19, we are seeing accelerated adoption of digital lifestyle by consumers and digital transformation by corporates, there will be massive amounts of data being created. This can be extremely useful for AI-based companies like Sunday,” she said.
This penchant for technology-led innovation is likely to aid Sunday’s Indonesian expansion as well.
As far as insurance goes, Indonesia is a fledgling market. In 2019, the country’s insurance penetration rate stood at 1.99%, well below Thailand’s 4.99% and Malaysia’s 4.72%, according to data from SwissRe Group. Insurance plans are primarily sold through traditional channels like agents and banks, which require extensive paperwork.
This is where Sunday feels it can be an agent of disruption.
“With our proven track record in Thailand, we aim to deploy digital insurance claims and healthcare services for our local customers in Indonesia. We also have plans to provide affordable insurance protection for the local population and SMEs across Tier-1 and Tier-2 cities in Indonesia through partnerships,” said Cindy.
Within Thailand and Indonesia, insurtech companies currently offer sales, distribution, or brokerage solutions, she said.
Sunday, on the other hand, has proprietary machine learning models that help it price and develop customised products for customers.
“Data analytics capabilities allow us to apply various data models throughout the insurance and customer service value chain for scaling and optimising our claims cost as we pass the margins back to our customers,” Cindy said. “Digitising the risk underwriting process allows us to also offer real-time pricing with more dynamic adjustments depending on risk profiles and growing data points.”
While the technology developed for the Thai market will prove to be useful, Sunday will have to contend with local players like Pasarpolis as it ventures into Indonesia.
PasarPolis started its journey as an aggregator of insurance products in 2015. It has since transformed into a provider of affordable insurance solutions by utilising big data and algorithms and partnerships with insurance majors. The company sells a variety of insurance products covering health, vehicle, accident, property, travel, and life. In May last year, PasarPolis announced plans to expand to Thailand and Vietnam.
It closed a $54 million Series B funding round in September and is backed by LeapFrog Investments, SBI Investment, VC firms Alpha JWC, Intudo Ventures, and the Chinese consumer electronics giant Xiaomi.
Future of insurance
With the increasing prominence of technology, competition is expected to increase for Sunday.
The insurance business is going digital at a remarkable speed, global law firm Baker McKenzie said in its Thailand Insurance Outlook 2018-19. In the past year, there were more and more insurers streamlining their operations and seeking leaner corporate structures.
Almost all of them are expanding their online sales, with some even partnering tech startups. In Thailand, this effort is supported by the Office of Insurance Commission (OIC).
Two other notable players in Thailand’s insurtech, besides Sunday, are the car digital insurance platforms Thai Fairdee and Carpool. Using the pool concept, the platform will give back a certain percentage of annual premiums to consumers who do not make claims. Fairdee is the first startup approved by the OIC to take part in the regulatory sandbox, and Carpool is Thailand’s first P2P insurance broker.
To maintain underwriting efficiency and retain market share, most insurers are actively developing their own technology, adopting insurtech, or partnering with brokers and established insurtech platforms. Insurers in the motor insurance and health insurance sectors are the most active in these developments.
In the meantime, Sunday will go deeper into the healthcare vertical and scale through B2B/SME, digital agency, and partnerships channels.
“We aim to be a leading insurance technology group with full-stack solutions and significant growth in Thailand and Indonesia within the non-life insurance markets in the next five years,” Cindy said, adding that the company is also looking at an IPO in the future. Over the next few years, it will focus on revenue growth, path to profitability, and further building its business model.
The Thai non-life insurance market is highly competitive. Of the approximately 60 non-life insurers in Thailand, the top 15 insurers have an aggregate market share of 73 per cent, according to Baker McKenzie.
Consolidation of incumbent players within non-life insurance markets in SEA is expected as competition for growth continues to heat up and capital regulations continue to tighten, Cindy opined. “Incumbent market players may aim for inorganic growth through M&As. Insurtech firms aiming for full-stack model may consider acquiring small- to medium-sized players unless they consider digital licences if and when local central banks issue them,” she said.
Meanwhile, Sumet Orsirivikorn, partner at Baker McKenzie Thailand, says that with increasing demand, traditional tech startups could turn to focus more on insurtech and this would simultaneously help increase players in the market. “The Thai insurance industry still needs more firms which are game-changers. At the same time, insurers that are keen with technology and exploring opportunities could potentially build their own insurtech, or even acquire existing ones as a shortcut,” he said.
“There are currently not many key insurtech players in the market. This gives new insurtech firms more opportunity to enter the market where demand is high because all insurers are looking to collaborate with insurtech firms in order to modernise their businesses,” added Sumet.