Top insurers such as AXA, RSA, QBE and Zurich face a potential multi-million pound lawsuit from British pubs, hotels, restaurants and leisure groups, who allege that legitimate business interruption claims have been rejected.
A new Hospitality Insurance Action Group (Higa) yesterday issued a “call to arms” to the sector to step forward and have their policies checked for free in the latest move to tackle insurers over their response to the coronavirus pandemic.
The most stringent government lockdown in peacetime history, ordered in March to slow the spread of a disease that has caused more than 24,000 British deaths to date, has left businesses struggling for survival and the economy facing a deep recession.
Any successful claim will hinge partly on whether the lockdown triggers a clause in business interruption policies designed for insured premises that cannot be used because of restrictions imposed by a public authority, experts say.
The Financial Conduct Authority (FCA) said earlier this month that most insurance policies bought by smaller British companies do not cover the coronavirus-related disruption, but that those that do should pay out quickly.
AXA, RSA and Zurich said yesterday that very few businesses would have BI cover that would extend to the pandemic, but that they were paying valid claims.
QBE also said it was paying valid claims and that its policies did not cover a global pandemic where general movement and business restrictions had been imposed by national governments.
Magazine publisher BluInc Media Sdn Bhd has ceased operations due to challenges arising from the digital disruption and Covid-19. The publisher, well known for producing magazines such as CLEO, HerWorld, Jelita, Marie Claire, among others, ceased operations on Thursday (April 30).
Its chief executive officer Datin Azliza Tajuddin said the business had already been under tremendous challenge over the years from the digital disruption.
"While we had made increasing investments to build our digital capabilities, it was still unclear whether we had gained sufficient traction while the losses continued to increase. With the current movement control order (MCO) to contain Covid-19, the losses continued even more for the months of March and April, and this trend is expected to continue for the next few months. It is uncertain that we will be able to see any light at the end of the tunnel," said Azliza in a note to the staff at BluInc Media.
She said the board of directors decided to cease operations of BluInc's print and digital publications. BluInc has been in the publishing sphere for almost four decades, with over 20 magazines in three languages.
Qoala, a Southeast Asian Insurtech startup founded by Harshet Lunani and Tommy Martin in Indonesia, today announced its successful US$13.5 million Series A.
The round was led by Centauri Fund - a JV between funds from South Korea’s Kookmin Bank and Telkom Indonesia. New investors in the round included Sequoia India, Flourish Ventures, Kookmin Bank Investments, Mirae Asset Venture Investment and Mirae Asset Sekuritas, with participation from existing investors, MassMutual Ventures Southeast Asia, MDI Ventures, Surge, SeedPlus and Bank Central Asia’s Central Capital Ventura.
Harshet Lunani, Founder and CEO at Qoala, said: “As a relatively new entrant in the space we are delighted to partner with leading global investors whose thought leadership as well as operational experience will allow us to maintain our innovative edge. This truly demonstrates the ecosystem’s belief in what Qoala is trying to achieve – humanizing insurance and making it accessible and affordable to all.”
Kenneth Li, Managing Partner, Centauri Fund, said: “Our investment into Qoala was led by our conviction of the company’s multi-channel approach to Indonesia’s untapped insurance industry. Our thesis identified that Indonesia has a considerably low gross written premium (GWP) to GDP ratio in comparison to other emerging countries, coupled with the large growing middle class in need of more security in their financial planning which allows immense potential for the insurance sector to take off in Indonesia through innovative propositions.
“Qoala is a prime example of our thesis on the sector, which is why we decided to lead the Series A round through the Centauri Fund (KB-MDI partnership fund) as the fund’s first investment.”
Sharing his thoughts on the investment, Pieter Kemps, Principal, Sequoia Capital (India) Singapore, says, “We have been lucky to partner with Qoala, witnessing their rapid growth from the early days. The strength of their team and technology has enabled them to rapidly launch new products, insurance integrations and distribution partnerships. All geared towards lowering the barrier to insurance adoption in Indonesia with simple, affordable solutions that can be accessed with little to no friction – something that was missing in Indonesia so far. We believe this funding will help Qoala further establish itself as a leading insurtech player in Indonesia and beyond.”
Headquartered out of Jakarta, Indonesia, Qoala’s founding vision is to provide customers with a multi-channel insurance solution. The startup has two business models:
Working with large scale platform partners to drive awareness about insurance with consumers due to low penetration of insurance in Indonesia.
Supporting the traditional offline insurance channels, which currently contributes 99% of insurance premiums, to become digitally enabled through Qoala’s app for agents/brokers; and supporting creation of new intermediaries in the future.
Just over a year after launch, Qoala has processes over 2 million policies per month, up from 7,000 policies in March 2019, and has diversified its partnership portfolio to serve five core industries: travel, fintech, consumables, logistics, and employee benefits.
“The funding will allow us to invest further into technology, people and brand to fuel our multi-channel strategy, enabling us to better serve our customers, platform partners, and insurers,” said Tommy Martin, cofounder of Qoala.
Tommy notes that the present pandemic crisis has resulted in increased demand for innovative and scalable services to support the industry as physical contact restrictions are impacting traditional offline sales of insurance.
“We have also accelerated our new Covid-19 offerings for consumers and MSMEs across Indonesia to provide pay-outs to those affected by the pandemic, including those who have had their treatment partially or fully subsidised by the government and are hence ineligible per usual insurance plans. We will roll this out on a larger scale within the next 4 weeks,” he adds.
Qoala is hiring across teams as the business looks to build on its exponential growth, with plans to double its head count to 300 over the next year.
The startup has a number of partnerships with prominent brands across Indonesia, including GrabKios, JD.ID, Shopee and Tokopedia. Qoala’s customers also include other industry leading digital platforms such as Investree, PegiPegi and RedBus, as well as traditional giants such as MAP Group. Their unique go-to-market approach is supported by over 20 insurers including global players such as AXA Mandiri, Tokio Marine, Great Eastern as well as local insurers like ACA, Adira and BRI Life.
One of those partners, Edwin Sugianto, COO & CMO of Mandiri AXA General Insurance (MAGI), says it has been good working with Qoala. “The team has been at the forefront in partnering with us to provide customers with innovative insurance solutions, supported with seamless experience through their tech platform and customer support.”
An Investment Linked Policy (ILP) is a hybrid product consisting of two different components – insurance and unit trust funds. ILPs are more affordable, especially for those in their 20s and early 30s.
They are gaining popularity as you can mix-and-match different types of insurance that offer a sum assured for death, disability, illness, accident and hospitalization with the life insurer’s unit trust funds to create your ideal insurance policy.
The respective benefits of insurance and unit trust funds
1. Your premium is fixed but your insurance charges are not - ILP policyholders know that their premiums are fixed. But not many of them know that their actual insurance costs are not fixed and will increase as you age.
Let’s say you buy an ILP in your 20s. Your actual insurance cost is low. Thus, a large portion of your premium will be allocated to your unit trust fund. Hopefully, it will grow in value over time. 30 years later, you are now in your 50s. Your insurance cost has gone up, exceeding your “fixed ILP premium”.
How do you cover the shortfall? It will be taken from the current investment value of your unit trust fund. Hence, despite a rise in actual insurance cost, you will maintain your fixed ILP premium.
The Investment Linked Policy benefits change as you age.
2. What if your unit trust funds have been fully exhausted? - Poor investment results from your unit trust fund or substantial hikes in insurance costs can wipe out all of your investment value.
Will your ILP be terminated if this happens? Your life insurer will demand a top-up premium. If you agree to make the extra payment then all is well. The ILP will continue to be in force. Otherwise, your ILP will be terminated.
3. Minimum Allocation Ratio (MAR) - Effective July 1, 2019 BNM implemented a change to ILPs in regard to the MAR. Your ILP premium will be categorised into allocated premium and unallocated premium.
The different payments between allocated and unallocated premiums.
Prior to July 1, 2019 the minimum proportion allowed for allocated premium or MAR from your ILP premium was as follows:
Minimum allocation ratio before July 1, 2019.
Effective July 1, 2019, the MAR from your ILP premium will be as follows:
Minimum allocation ratio after July 1, 2019.
In short, for every RM1, 000 in ILP premium you pay, your life insurance company will have:
Breakdown of every RM1000 paid in premium.
As such, ILPs purchased after July 1, 2019 will be more expensive than ILPs purchased earlier.
4. An option to increase your sum assured - If you have an existing ILP purchased before July 1, 2019 you have two options to increase your sum assured or to add-on critical illnesses, a medical card or personal accident insurance.
Option 1 - You can buy a new ILP, but this will be costly due to the BNM changes.
Option 2 - You can consider increasing the sum assured in your existing ILP. It may be cheaper as your additional premium will follow the new BNM MAR.
It’s best to compare the two options to find what is suitable for you.
5. How to get the highest sum assured at the lowest premium - Insurance agents use a software to generate quotations for you. Here’s a hack to get the best insurance deal. Your agent proposes an ILP, where the premium is RM150 a month with a sum assured of RM250, 000.
There are two ways to get a better deal:
Option 1 - Get your agent to increase the sum assured to RM300, 000. The software is able to generate a quotation where the premium is still RM150 a month but the sum assured is raised to RM300, 000.
If that is the case, raise it to RM350, 000 or a higher sum where the software is unable to churn out a quotation.
Let’s say, the software stops generating a quotation at RM350, 000. You then lower it down to RM345, 000, RM340, 000 – until you reach a comfortable figure.
Most likely, you will end up with a sum assured which is a lot higher than the original RM250, 000.
Option 2 - Choose this if your intended sum assured is the RM250, 000 your agent proposed.
Get your agent to reduce the premium to RM120 a month. If the software is unable to generate the quotation, then increase the premium to RM130 and RM140 a month.
Let’s say you can get the policy for RM 130 a month. This means you save RM20 a month, which is 13% of the original premium.
Social distancing norms in the month of March when a lot of people end up buying new insurance policies to save tax and the announcement of the new tax regime earlier in the year which does away with Section 80C deductions seem to have hit sales of life plans.
New business premium for life insurance companies tanked 32% in March to ₹25,409.30 crore compared with ₹37,459.36 crore in March 2019, according to data published by the Insurance Regulatory and Development Authority of India (Irdai). Life Insurance Corp. of India (LIC), which has the largest market share of nearly 76% (in terms of number of policies), reported a dip of 31% in new premium income in March compared to the same month last year. Among private insurers, Aviva Life Insurance (-80.18%), Pramerica Life (-73.1%) and Future Generali Life (-62.24%) were the worst hit.
However, For the financial year, the new business premium for life insurance companies grew at 26.60%.
The pandemic effect - The nationwide lockdown has had huge ramifications for the sector. March is an important month for the life insurance industry. A large number of fresh policies are sold in March, before the financial year-end, for tax-saving purposes. Most of the sale is still driven by physical interaction but starting early March, social distancing had begun. As a result, business activity took a hit.
Moreover, in the wake of the covid-19 crisis, mobilization of savings could take a hit in the near future. For the life insurance sector that largely sells savings products (bundled policies), a drop in sales could spell a tough time to channelize household money into insurance products.
The industry is expected to move into protection and guaranteed savings products. The liquidity requirement is always a factor since the product is meant for the long term. Under the current circumstances, decision making may get postponed until there is further clarity on cash flows. There will be a higher appreciation for insurance as risk protection.
New tax regime - The announcement of the new tax regime also seems to have hit the sales. Though the new regime is applicable from FY21, individuals may not want to get into long-term commitments if they don’t intend to avail tax deduction from next year.
Growth of new business premium of life insurers in December was up 37.5% compared to the same month in the previous year. However, growth started decelerating in January (18%) and February (1.8%) and entered the negative territory in March.
It was a double whammy. The new tax regime as well as the pandemic has a role to play. For life insurers, most amount of business happens during the last week of March but due to the lockdown, bancassurance and agency-driven businesses took a hit. Had covid-19 not paralyzed the economy, the growth wouldn’t have fallen so drastically.
Once the lockdown is lifted, the way insurance is sold will come under stress. Limited policyholder engagement activities due to social distancing norms, new business may continue to be low in the near future.
There is a possibility that policyholders could gravitate towards products that offer fixed returns and have a simpler structure. Life insurance companies may have to look at such product structures aggressively.
The life insurance industry will also have to be more proactive about digital engagement.
Former Indonesian Child Protection Commission (KPAI) commissioner Sitti Hikmawatty – who was fired by President Joko "Jokowi" Widodo after making the scientifically inaccurate claim that "strong sperm" could impregnate women in swimming pools – said she accepted her dismissal, while also claiming she had been treated unfairly.
During a teleconference on Tuesday (April 28), Sitti said the agency's decision to recommend her dismissal was made in violation of procedure, saying that she should have been given an administrative sanction and a letter of reprimand instead of being fired.
"What I got instead was the ultimate punishment without having a chance to defend myself. This should not happen again," Sitti said, urging the President and relevant ministries to fix the "legal loophole" in the commission's regulations.
She nevertheless said that she accepted the decision and vowed to continue to fight for child protection in any way possible.
Jokowi signed a decree on the immediate dismissal of Sitti from her post as the KPAI's commissioner for health, narcotics and addictive substances following a recommendation from the agency's ethics council. The council had stated that Sitti had violated the commission's code of ethics by making the inaccurate statement.
Sitti made the controversial remarks that ultimately resulted in her dismissal during an interview with tribunnews.com in February, saying that women should be careful about the risk of getting pregnant when swimming in public pools with men.
"There is an especially strong type of sperm that may cause pregnancy in a swimming pool," Sitti said. "Even without penetration, men may become sexually exited [by women in the pool] and ejaculate, therefore causing a pregnancy."
Her blunder was immediately met with a strong response from the public and medical practitioners.
The Indonesian Doctors Association (IDI) said it was impossible for women to get pregnant in a swimming pool as the water contained chlorine and other chemicals. "Sperm cannot survive in these conditions," IDI executive Nazar said at the time.
Sitti who initially defended her claim by saying it was based on scientific journals later retracted the statement and apologized. The KPAI itself issued a response saying that Sitti’s statement did not represent the views of the organization.
Stoqo Teknologi Indonesia, an online platform that supplies fresh ingredients to food outlets, is shutting down, becoming the latest casualty of the coronavirus outbreak. Stoqo, which delivers everything from chili and eggs to coffee powder, is ceasing operations after the Covid-19 pandemic "drastically” slashed its income, the Jakarta-based company said on its website.
The move underscores the heavy toll on the region’s tech startups. Many firms have seen revenue evaporate after governments imposed tough restrictions on social activities to curb the spread of the virus, forcing them to cut salaries and jobs to deal with a cash crunch. Jakarta-based Traveloka, South-East Asia’s largest online travel service, dismissed about 80 employees in Singapore as part of broad cost-cutting measures, Bloomberg News reported this month.
Stoqo was founded in 2017 by former McKinsey & Co associate Aswin Andrison and Angky William, a former software developer at Amazon.com Inc, to streamline food supply chains by sourcing and delivering ingredients to small restaurants. In 2019, the business grew seven times, serving tens of thousands of food outlets across Greater Jakarta, Chief Executive Officer Andrison said early this year. He declined to comment for this story.
The startup employs about 250 people, according to its LinkedIn profile. It has raised money from investors including Accel Partners, Alpha JWC Ventures, Monk’s Hill Ventures and Insignia Ventures Partners.
Top insurers such as AXA, RSA, QBE and Zurich face a potential multi-million pound lawsuit from British pubs, hotels, restaurants and leisure groups, who allege that legitimate business interruption claims have been rejected.
