VSure, an insurance technology (insurtech) start-up founded in 2017, aims to disrupt the insurance market by providing the masses with on-demand, lifestyle insurance policies.

Eddy Wong, its co-founder and CEO, says these policies will be highly flexible with regard to the tenure and sum assured. They are also more affordable than some of the products currently offered by conventional insurers.

“Ultimately, we want to provide policyholders a choice of tenures [with a given sum assured]. In the past, consumers had very limited choices offered by insurance agents. With our products, they can choose how much protection they want and for how long, according to what they can afford. We want to disrupt the market in a positive way,” he says.

For instance, a person may buy a personal accident insurance policy with a one-year tenure that entitles him to a claim when he is injured during an accident. But does he really need a one-year policy if he is working from home during the pandemic and not in a high-risk job?

Wong does not think so. “Why are you paying a relatively higher price — let’s say, RM100 plus a year — for a personal accident policy? Our risk profile varies, based on the lifestyle and activities we engage in. You should be paying for a day, or a week, when you are engaged in higher-risk activities during that period,” he says.

VSure’s EzPA is based on such a concept. Offered in partnership with AXA Affin General Insurance Bhd, the personal accident insurance policy provides 24-hour protection within Malaysia. A user of the VSure mobile application can purchase the policy at RM7.50 for financial coverage of RM5,000 in case of accidental death or permanent disability.

Four more on-demand insurance policies created by the VSure team are expected to be launched before the first quarter of next year, pending Bank Negara Malaysia’s approval. Wong is not allowed to disclose the details of the upcoming products due to non-disclosure agreements the start-up has signed with other parties.

“What we are doing now is just the starting point. Eventually, those who want various on-demand, pay-per-use health and medical protection products, and even cybersecurity policies, can get them from us,” he says.

The start-up’s capability to design and manufacture its own insurance policies is a key factor that differentiates it from other local insurtech start-ups, he adds. This allows VSure to self-design and manufacture innovative products and offer them to the masses at competitive prices.

Curated products, which are products offered by existing insurers and sold through VSure but not their agents, will also be found on the VSure app moving forward.

“The central bank does not stop us from partnering with other insurers. We are now partnering with AXA Affin, Allianz, Etiqa and MCIS. We want to distribute curated products that fit into our on-demand digital platform,” says Wong.

First insurtech start-up approved by Bank Negara to offer on-demand products

VSure has been admitted to Bank Negara’s Financial Technology Regulatory Sandbox Framework. It is the first start-up to receive the central bank’s approval to offer on-demand insurance products to the masses, says Wong.

Being admitted to the sandbox means the start-up can design, manufacture and distribute its own products without being required to have RM100 million in paid-up capital, as required by the Insurance Act 1996 for a direct insurer.

In August, Revenue Group Bhd, an ACE Market-listed company that delivers customised and complete payment solutions, acquired a 25% stake in VSure, marking its expansion into the insurance sector.

Why would Revenue Group invest RM12 million in VSure? Wong says it is because the potential of the insurance sector in Southeast Asia is huge. Based on data provided by Swiss Reinsurance Co Ltd, a Switzerland-based reinsurance company, the combined premium volume of the Asean insurance market accounted for only 2.1% of the world’s market share in 2017, while China and Japan accounted for 11.1% and 8.6% respectively.

In Malaysia, the life insurance penetration rate hovered at around 54% from 2015 to 2019. There is a lot of potential in the local market that VSure can tap into with the right products, partnerships and distribution channels.

“We expect VSure’s business to grow to RM300 million to RM500 million in the next two to three years. The bigger boys that rely more on their agency force could have a different view. But this is what we see,” says Wong.

He adds that the market potential lies in the lower rung of the M40 group and the B40 group. Many products, especially life insurance, are priced at about RM400 a year, which is too expensive for them.

“For the B40 group, their household income could be just above RM2,000. They cannot afford many existing products. They are already struggling to put food on the table. And there is the pandemic to consider,” says Wong.

He hopes VSure’s on-demand, pay-per-use insurance policies can cater for the needs of these people. The start-up will distribute its products mainly through its partners and online channels.

Wong acknowledges that direct distribution through online platforms to rural folks will be challenging as their financial literacy is lower than those living in the cities. “Yet, we are prepared to spend more money on digital marketing to create more awareness in rural areas,” he says.

Moving forward, Wong wants to increase the headcount of his team from 20 people to 40 by June next year. He is looking to grow the start-up and raise funds from its Series A funding round next year.

“Hopefully, we [will graduate from the regulatory sandbox framework] and will be ready with the right level of risk-based capital required by the law,” he says.