Pet insurance is a hot topic right now, with startups raking in record funding from VC’s and private investors alike. Over the past six months over $365M USD has been invested into pet insurance, with the large bulk of $350M USD going to UK-based Bought by Many in the summer, and most recently last month, a $2.9M USD round to Swedish startup, Lassie. So, with the majority of action taking place in Europe, what’s the landscape looking like in Asia, and should we expect to see significant growth over the next few months or years?
Let’s first take a step back and look at the industry as a whole. Although the first pet insurance policy was written up in 1890, it was only taken out on a dog some 30 years later, in Sweden. A few decades after that in the 50s we saw the UK offering pet policies, but it was only in the 80’s that the US jumped on the bandwagon and started offering policies. In fact, in 1982 the collie who played Lassie was the first dog to be insured in North America. As far as we know, it was only in the mid 90s that pet insurance was introduced in a few countries across Asia, but even today, less than 1% of pet owners in the region have policies for their pets.
Perhaps one of the main factors for Europe’s lead in pet insurance is simply the headstart they received. Pet owners across the continent would now already be a few generations deep in terms of exposure to marketing and education around the benefits. In the more mature markets of Europe and North America, the industry has had time now to go through a number of iterations as well. From policies originally created for livestock that were basically copy/pasted for pets, to slightly more customised, yet still with very inflexible terms, the industry hadn’t been hugely influenced by tech until about a decade ago. During this time even traditional insurers such as UK-based banks Halifax and Lloyds, stepped in and out of the game, halting their coverage and then reinstating it shortly after following backlash. Clearly the industry needed reinvigorating to make it more lucrative for the insurers, and more useful for the pet owners.
These moribund policies, which are still the majority, are luckily being replaced by overall fairer and more inclusive coverages. All the startups with big raises have tech at the forefront of their product, providing extreme policy customisation through automation, as well as extra services and perks. Transparency through great UI/UX, easy-wording and easy to access customer services are further improvements consumers have been looking for from insurers in general. Heavy focus and spend on performance marketing is allowing many of these companies to increase their customer base rapidly. By scaling quickly and by automating many processes, while still retaining a high level of customer care is at the heart of these startups’ success.
Across Asia we’re seeing some very promising developments within the space. It was only in 2015 that pet insurance was offered to consumers in Singapore by MSIG’s Happy Tails. They have reported an almost 20% year on year growth, despite taking a more traditional approach to pet insurance. They also reported that 80% of their claims were made online. So, we have a growing market that is opting for digital first. Add to that a pandemic which increased pet ownership and therefore increased demand and price of pets, and we have a very attentive market. As Mendel, Brought by Many’s CEO confirms: “When you are spending thousands of pounds on a pet, suddenly spending 50 a month or so on insurance seems a logical decision.”
Singapore however doesn’t yet have it’s own pet-focused insurtech player, but there are a few making waves in the region. OneDegree, founded in 2016 in Hong Kong has received total funding of $58M USD to date. As the founder, Alvin Kwock explains, “we also built the entire technology systems ourselves to make the system ten times better. For example, it typically takes two to four weeks to get claims paid. But we get 90% of the claims paid in just two days.” Removing the need for human interaction across every step through advanced AI and automation has massively sped up many processes. They have so far used their initial foray into pet insurance in Hong Kong to springboard into other insurances such as fire insurance, and plan to move into many more sectors, as well as expanding across the whole region.
In Malaysia, Oyen celebrated its seed round of $420K USD back in April participated by notable backers such as Hustle Fund, alongside angel investors who are former and current executives from Airbnb, Facebook and Rocket Internet. As Shiyan Koh, General Partner and Co-Founder at Hustle Fund explains, “Southeast Asia is an exciting region with a lot of growth ahead of it, driven not just by accelerating technology adoption across industries, but also startups like Oyen who bring a product-led, customer-centred perspective to traditional products like insurance.” This insight is spot on, and we expect to see a lot more players popping up in the not so distant future.
An interesting angle for these startups to take would be a further focus on preventative care. In human health insurance, for example, we’re seeing companies such as Vitality offering discounts or perks for users who wear health trackers and reach specific fitness or dietary goals. And indeed, Swedish newcomer Lassie, mentioned earlier, has added some of this approach to its offering. When users interact with their informational content, they can get discounts on their next premiums. Malin Posern, partner at Passion Capital, who participated in Lassie’s investment round, explains; “40% of injuries are based on preventable stomach injuries.” The rationale is that if their customers are educated and their respective pets are living healthier lives, they not only have a more receptive and satisfied user-base, but from a financial point of view, they can make big savings in payouts.
At Rhino Ventures we have been building an extremely advanced pet health and location monitor called MyPetGo, which could potentially be used by pet insurance companies, in much the same way as Vitality. Being based in Singapore and Vietnam, a partnership such as this with Asian insurtech startups, would provide pet owners with much more insight and control over their pet’s health, while avoiding payouts for more preventable issues on the side of the insurer.
At the moment the playing field in Asia is still relatively open, so although we could see one of the existing pet insurtech startups taking over the region, there is still a lot of space for either new pet-focused insurtechs to enter, existing insurtechs from other industries to pivot or expand into pet insurance, or more traditional and established insurances to go through a digital revolution. Whatever happens, it will be companies focusing on automation, while maintaining a high level of user experience, that will conquer.