Financial technology (fintech) has disrupted the financial services industry in a big way. One area in which it has not made much headway though is insurance. 

But this could change if Paul Khoo, founder and CEO of GetCover Sdn Bhd, has his way. Next month, the company plans to launch GetCover, a free mobile application that allows users to buy motor insurance directly from insurers. It is expected to be the first of its kind in the market, says Khoo.

The company has common shareholders with Standard Financial Adviser Sdn Bhd (StandardFA), a licensed financial intermediary which comes under the purview of Bank Negara Malaysia and the Securities Commission Malaysia.

Mobile apps that link end users directly to products and service providers benefit both sides of the equation. Consumers save time researching products that are available in the market while businesses are able to streamline operations and save distribution costs. 

Khoo says internet and technological advancements in the insurance industry are not happening fast enough for several reasons. They include resistance among insurance players or their lack of ability to extract relevant consumer data on the purchase of insurance products.

Understandably, resistance comes from insurance agents, whose income is derived from the distribution of insurance policies, so much so that complaints have been lodged against GetCover with the regulators.

Khoo, who is chairman of StandardFA, says the global insurance industry has not seen a lot of innovation because insurers are profitable under the old business structure, which is the distribution of insurance products through agents. 

“Why change something that is profitable? And why disrupt a system that is doing well? So, the focus has not been there. Furthermore, the management of insurance companies focuses on delivering higher profits each quarter instead of looking into digital innovation that will disrupt their existing distribution channels,” he adds. 

Looking at the 2015 data on motor insurance provided by MPI Generali Insurans Bhd, only 1.5% of the premiums — amounting to RM106 million — was purchased online. The number partly reflects the fact that most insurers have not utilised internet and mobile technologies in their business model, says Khoo.

Fintech players are driving innovation in other industries. Familiar names include GoBear.com, a price and value comparison website that allows consumers to purchase travel insurance and other financial products online. Malaysia’s largest value comparison portals — iMoney and RinggitPlus — added insurance products to their websites last year.

Fundsupermart.com, which is operated by iFast Capital Sdn Bhd, jumped on the online insurance bandwagon in July. According to an email sent to its members, they get 30% cost savings when they buy a RM500,000 term life insurance plan via the portal. 

Difficulties in extracting data

Khoo notes that while advancements in the insurance space have been largely the contribution of fintech players, the purchasing process is mainly done online rather than with mobile apps. 

More importantly, he points out, the existing portals are not fully automated. This means there is still a lot of paperwork at the back-end office. For instance, when consumers select an insurance product after comparing prices and value, they receive a call from the portal’s agent asking for additional information. This information ends up on forms filled up by the staff in the back-end office. 

Consumers may also receive an email from the portal after selecting an insurance product. A file is attached to the email showing the monthly and yearly premium of the product. Before they can proceed further, consumers have to make an appointment with the portal’s agent and visit the office to fill up necessary documents. 

“Even though the customer experience has improved, there is still the same amount of work to be done manually, either by the consumers or agents. If this can be eliminated by a fully automated transactional platform, not only could insurance companies drive down operation costs, consumers could be rewarded in different ways with the cost savings,” says Khoo.

He believes one of the reasons these online portals are unable to eliminate the manual work is the current regulatory framework. Financial products that are more complicated, such as life insurance and investment products, including unit trust funds, still require the physical signature of consumers. However, the process for motor insurance is comparatively straightforward and simple. 

Another reason is that online portals lack the capacity and capability to extract consumers’ data efficiently. This is where GetCover comes in, says Khoo.

Unlike most of the online portals, GetCover can extract all the relevant data when consumers key in their basic information, such as their names, mobile phone numbers and car registration numbers. Consumers can then proceed to purchase the motor insurance product. 

“GetCover can do this because we have tied up with several well-established entities to tap their business intelligence service to pull and transfer data,” says Khoo. The company charges financial advisers who use the mobile app and insurance companies that distribute their motor insurance products via GetCover a minimal fee for its services.

The mobile app has already been fully integrated with the internal system of an insurance company. This means consumers can buy the insurer’s motor insurance products directly through the app. Khoo is negotiating with six other insurance companies to bring their motor insurance products on board. 

The price and value comparison service provided by several online portals is available on GetCover. Consumers can also renew their road tax as well as review and rate insurance products via the mobile app. 

“Motor insurance products have the same premium for now. But GetCover is being positioned to smoothen the transitional period for the detariffication of motor insurance, which will take place in phases until full implementation by 2018,” says Khoo. 

How it all began

A year ago, Paul Khoo, managing director of Standard Financial Adviser Sdn Bhd, had not heard of the word “fintech”. Now, he is one of the leaders of the fintech community and initiator of GetCover, a mobile application that allows users to buy motor insurance directly from insurers.

“Last November, I was in Singapore for a meeting with investment bankers and they talked about fintech,” says Khoo. “I asked them, ‘Hey guys, hold on. What’s fintech?’ They laughed and said, ‘Come on, you are in this line and you don’t know what fintech is?’

“Immediately after that, I started to do research to understand what fintech is all about. It led to the incubation of the GetCover idea. I looked at the insurance industry and found that it has hardly changed in the past 100 years.”  

After that meeting in Singapore, he hired a personal assistant to build “a little library” on fintech and the insurance industry in his computer. He then conducted research and reached out to venture capitalists and private equity firms for discussions and brainstorming sessions.

The response was positive as fintech is one of the hottest topics in town, says Khoo. The participants saw huge potential in bringing the internet and technology into the insurance industry. They believed this would benefit both consumers and insurers and attract a huge pool of users. 

Khoo says his team is looking to launch the mobile app next month. And if things work out, GetCover will roll out several other functions in the next stage, such as enabling users to “make claims on the spot” should the need arise. 

“Fintech is all about convenience. Claiming on the spot means that if you were involved in a road accident, you would be able to take a picture of the cars and upload it to your insurer through the app. Then after you make a police report, you can take a picture of it and upload it via the app. When these have been done, the claim you are entitled to would be based on what was written on the police report,” he explains.

Other functions in the pipeline include “tow truck assist” and “panel workshop allocator”. “We are also looking at regional expansion by targeting to attract 500,000 users,” says Khoo.

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