Mar 126 min read

InsurTech Ohio Spotlight with David Henderson

David Henderson is the Founder and CEO of DRVR, making driving safer, by combining data from smartphones with AI. David was interviewed by Michael Fiedel, Co-Founder at InsurTech Ohio and Co-Founder at PolicyFly, Inc.

David, can you share a bit of your background and what motivated your move to Southeast Asia?

“I have a career of about 25 years or so as I'm in my late forties. I was working in Australia in the telematics industry for a company called Intelematics Australia. Like many people who have an entrepreneurial bent, I thought I could do things a bit better than what was being done there. So, I decided to start my own business and looked at markets that were underserved by telematics with a reasonable insurance industry. I had some family connections in Thailand; my brother lives here, so we looked at Thailand, Singapore and Malaysia. Thailand won out as the more interesting package. At the time, the economic community was just coming together, which offered a large potential market of 700 million people. It was the number six economy in the world. After visiting a few times, I thought it was an interesting place to live, so I gave it a go.”

As a foreigner building a business abroad, how has your experience been?

“It has been way tougher than I had anticipated. It's very challenging to build a business anywhere, but to build a business in a country where you have no experience with doing business there, and you've only been there a couple of times on a holiday is tough. I knew very little about the business environment in Thailand. I had some idea, but it was a very interesting and steep learning curve. It took me a while to understand how business works in this part of the world.

It's actually not that different from other parts of the world, but relationships are way more important than things like, for example, price or even product. Your connections, network and reputation are much more important than whether you have the best product or the cheapest price. That took quite a long time for me to learn and understand how people prefer to do business. I still haven't learned everything. There's a lot more to learn, but I think it's been an interesting endeavor and one that's been worth the effort.”

What do you think are some of the important challenges facing our global industry?

“There are a lot of interesting challenges in the insurance industry across the world. One area is autonomous vehicles as it’s gaining more prevalence, and that will change the insurance landscape for motor, significantly. That’s going to be an interesting development and will take some time to come. You'll see a transition period where there are autonomous and non-autonomous vehicles, and that's probably going to last a long time. I would say it could last maybe 10, 15, even 20 years. Looking at the cars on the road today, I still see cars that are 40 to 60 years old on the road. People aren't just going to throw away a car because there's an autonomous vehicle that they can use instead. It'll take time for that transition to happen.

That's been something that's been on the radar for a number of years. AI is a more recent development in terms of the direct impact on the insurance industry. In the last few years, we've seen the massive growth of ChatGPT, and that will have a very significant impact on insurance, making things like claims and customer service easier. We are using AI in our startup to help establish those communications between the customer and the insurer to help the customer save money on their insurance. The insurance company reduced their loss ratio by coaching drivers, showing them how they can drive better and establishing a rapport between the customer and the insurance company without a lot of cost.”

How are these challenges impacted by the culture in Southeast Asia?

“It's fair to say that in some areas, Southeast Asia is quite a bit behind. It takes longer for technology to be adopted. The insurance industry is much younger here than it is in the United States or Europe. Thirty years ago, there were no actuaries in Southeast Asia, and they have been around in the United States and Europe for a hundred years or more. Here you have some local players in all markets, you have local insurance companies, some of them are connected to the governments and many privately owned. You also have international players. There's a bit of a delay in adaptation of adopting technology, but on the bright side, there's also fewer of the legacy older systems in place.

The cost to change and bring something new in isn't as high because you're not replacing technology from 40 years ago. There's all this resistance from people who like the way they have always done it and believe it should be done that way because that's how they did it 20 years ago. There isn't as much of that mindset in Thailand. There's some openness to change, and the industry is large enough that we can have interesting development, technology and products. We have different things like micro-insurance for small trips. Small, low cost insurance products have a lot more potential in this region. Companies like PasarPolis in Indonesia, for example, are doing some really awesome stuff in the micro-insurance space.”

Who are some of the major players in the region?

“It's fair to say that there are no unicorns in the insurtech space in Southeast Asia yet. There are quite a few significant companies, though. For example, in Thailand we have our neighbors, Roojai, I believe they're series C now. They’re trying to tackle the problem of reducing the cost of insurance by cutting out the brokers. The commissions here are quite high, so it's usually about 30% commission for selling an insurance policy. Roojai is helping insurance companies by creating an online marketplace, and they're also starting to develop some of their own products. It's an interesting company. We've had quite a few engagements with them.

There are also companies like Sunday. Sunday is also a series C startup run by Cindy Lau. She's the daughter of the owner of a major insurance company in Malaysia. She decided to launch a startup in Thailand that’s aimed at policies for employees, group policies for things like health and lifestyle-related insurance policies, which were underserved in this market. That was mainly done by companies like Chubb and some of the Japanese players, but they've got a really interesting way of selling their product. It's also a direct-to-market sort of play.”

What are some of the opportunities that you see for innovation and growth, particularly in this geographic segment of the industry?

“If you look at it, the insurance industry is relatively small. Across Southeast Asia, you have a few pockets where there's quite good insurance coverage. For example, Singapore is a small country, but it has a relatively large insurance industry about the same size as Thailand’s industry. With one-tenth of the population, you have markets like Indonesia where many people don’t have insurance. Myanmar is even worse. The amount of people who have an insurance policy for either life or non-life products or health products is very low. Part of the main problem is distribution, getting insurance to those people, making it affordable and getting them to understand the value of that insurance offering. Companies who are agile and who have a low cost of delivery are able to offer micro policies for people.

For example, take a guy who works as a food delivery driver. Now, in markets like Indonesia there's no compulsory auto insurance and no health insurance provided by the government. if he has an accident, he might have dependents like a wife, some children, and if he's killed or injured in a road accident,, there's no safety net for those people. The problems are real, and if a company can overcome those major issues with distribution – which is now possible by using apps and targeting customers directly in a low touch, low cost way – there could be some viable products in the insurance space. There's a few problems here in that there's heavy regulation of the insurance industry, like there is elsewhere, but things like tariffs are set by the government. It's very hard to actually be competitive on price because you can't alter the premium by anything more than a few percentage points.

That means you really have to be efficient, be a lean operation, and be quite innovative to succeed in this market. There are quite a few insurance players in the region, but it varies from one market to the next. The market which probably has the most U.S. insurance companies would be the Philippines, because they have a historical U.S. connection there. Most people there are English speakers. Places like Malaysia and Singapore are more influenced by UK insurance companies. Thailand has a mixture of different ones. Indonesia, I'm suggesting that it's largely because it's Muslim, has a very low insurance penetration. There's a belief amongst many people that insurance is not necessary, the community will look after you if you have an accident or if something goes wrong. That may have been the case in bygone years, but that's less and less the case now where people are not living in a village anymore. They're living in a city, and they don't even know their next door neighbor.”