Job Losses - Covid-19 Pandemic

Due to the Covid-19 pandemic, job losses in the country has increased by 42 per cent year-on-year for this first quarter (Q1 2020), according to the Social Security Organisation’s (Socso) Employment Insurance System (EIS). The Impact of Covid-19 on Loss of Employment (LOE)", EIS said the pandemic has impacted many businesses, to experience a drop in demand at 37 per cent or being unable to operate as usual at 42 per cent.

The trend is only expected to accelerate from April 2020 onwards, with job losses increasing by 50 per cent to 200 per cent year-on-year for each subsequent quarter in 2020. In addition, the unemployment rate is forecast to hit four per cent in 2020 compared to 3.2 per cent during the 1997 Asian financial crisis and 3.7 per cent during the Great Recession in 2018.

Meanwhile, the retrenchment figures are expected to be similar to those during the 1997 Asian financial crisis due to pre-emptive measures of Employment Retention Programme (ERP) and Wage Subsidy Programme (PSU) taken by the government to prevent mass lay-offs. 

Youth Unemployment - The youth unemployment rate has remained mostly steady at eight to 11 per cent. However, they are the age demographic most vulnerable to retrenchment. Data shows that 61 per cent of job losses are among workers aged 40 and below, with 31 to 40-year-olds accounting for 32 per cent and workers under 30 making up the rest at 29 per cent. Male workers are more likely to be retrenched than female counterparts at 60 per cent male to 40 per cent female, this may simply reflect the fact that there are more men than women in the workforce,” it said.

The report states, out of 7.5 million active employees registered with Socso in 2019, 1.458 million worked in a tourism-related sector, while 1.457 million worked in manufacturing.

It should be no surprise then that over half of business closures occurred among large employers of over 200 workers in the tourism sector, while the manufacturing sector retrenched the most workers at 23 per cent of the total to reduce overhead costs after being forced to shut their factories.

Cutting Cost - Employers who have yet to retrench staff are embarking on cost-cutting measures nonetheless. One of the most popular methods is to reduce salary, especially for employees who have been employed for more than five years as their salaries are typically 45 per cent higher than those of shorter-tenured employees.

At 41 per cent, young employees aged 30 and below make up the majority of active employees registered with Socso, showing an increase of six per cent from 2018. Among them, 70 per cent have less than two years of working experience.

On the other hand, the report mentioned the proportion of workers aged 40 and above who are registered with Socso actually decreased by four per cent in 2019. Among this group, 84 per cent have served for more than two years at the same company.

Loss Of Job By State - Seventy-nine per cent of all job losses occurred in five states, namely (in order) Selangor, Kuala Lumpur, Johor, Kedah, and Penang. Selangor, the first-ranked state, accounted for 32 per cent of job losses. However, it should be noted that 30 per cent of all jobs are located in Selangor, representing an increase of six per cent from 2018.

Kedah accounted for one in six job losses despite being home to a relatively small number of employers. Job losses in Johor were mostly in the manufacturing sector at 37 per cent and tourism-related industries at 36 per cent.

Moreover, the report said in most other states like Kelantan, Melaka, Negri Sembilan, Perak, Sabah, Selangor, Kuala Lumpur, and Labuan, job losses were concentrated in tourism-related industries while few states deviated from that trend, including Putrajaya (ICT), Sarawak (construction), Pahang (other unclassified sectors), and finally Kedah, Perlis, Penang, and Terengganu (all manufacturing).

Foreign Worker - On average, each employer had 15 foreign workers for each retrenched employee. The ratio was even higher in large companies with more than 200 workers, which had 69 foreign workers for each retrenched employee.

Industry Losses - Job losses by states and federal territories involving the construction, finance and insurance, ICT, manufacturing, professional and technical, tourism-related and others, recorded Selangor at 6,128, Kuala Lumpur (4,959), Johor (1,457), Kedah (1,297), Penang (1,296), Sabah (1,183), Sarawak (845), Perak (727), Pahang (428), Melaka (284), Kelantan (196), Terengganu (171), Negri Sembilan (159), Perlis (55), Labuan (38), and Putrajaya (17).

Policyholders Sue Mis-selling Of Unit-linked Product

A group of UK and international investors have launched a multi-million-pound claim against life insurers Quilter International and Friends Provident International. The claim, which has secured litigation funding, centers around what the group alleges was the mis-selling of “high-risk funds” through insurance wrappers to “unsophisticated British and international investors living overseas”. The group said that many of the expats are now retired and have lost their life savings.

The products were described as life assurance policies, but the group said they were “unit-linked” and featured high risk funds which were “entirely inappropriate for unsophisticated investors”. The insurers “sidestepped British investment regulations” by selling over £100m  worth of these products via the Isle of Man. Both life insurance companies deny any wrongdoing.

Financial Difficulty - Old Mutual International, as Quilter International was then known, and FPI received several warnings prior to the funds collapsing, and “appropriate due diligence would have revealed the potential issues with the funds”.

The funds were linked to the collapse of LM Investment Management, which saw investors lose millions invested in funds including the LM Managed Performance Fund, Axiom Legal Financing Fund and the Premier New Earth Recycling Facilities Fund. Victims of LMIM have struggled for years to recoup some of their losses.

Response - A Quilter International claimed - “We sympathize with these customers, however Quilter International is the provider of the life assurance policy and does not provide advice in respect of any underlying investments, as that is the responsibility of the customer’s investment adviser." 

This sentiment was echoed in a statement from Friends Provident International (FPIL) - “FPIL is exclusively a provider of insurance products and does not provide investment advice. FPIL’s portfolio bond is a flexible and tax-efficient international policy through which a policyholder can invest in a range of asset classes of their choice. All investments are selected by the policyholder themselves, often with the assistance of an independent financial adviser chosen and appointed by the policyholder to provide personalized advice."

InsurTech Disrupting Insurance Industry

Insurtech is evolving rapidly in Asia thanks to Asian startups, whereas till recently startups in this sector were dominated by North American or European players.

Recent market moves, combined with economically disruptive recent events, are showcasing the new Asia startups that are putting the fear into traditional insurance firms who have been slow to adapt to the digital world. These up-and-coming players are offering digital solutions that reduce friction, whilst offering personalized, data-driven services to increasingly tech-savvy customers all over Asia.

Asian insurtech players are taking big steps forward and are in the process of revitalizing a once stuffy industry and looking to grab the attention and business of a new breed of customers.

A case in point, Indonesian insurtech startup Qoala just raised US$13.5 million in Series A funding from a variety of seed investors and reputable venture capital firms. The funding round marked the largest ever capitalization by an insurtech firm in Indonesia, where despite a population density of nearly 270 million people, there is a generally low awareness of insurance products and often low accessibility.

Qoala plans to use the funding to build-out its existing team over the next year. Besides providing coverage for five core industries including fintech and logistics, the Qoala app also supports traditional offline insurance channels, which still account for 99 percent of insurance premiums paid in the country and processes over 2 million policies a month since launching in 2019.

Insurtech’s innovation doesn’t just lie within technology. Qoala struck up strategic partnerships with partners like Shopee, JD, Grabkios and Grab for merchants, and Pegipegi which used to be the Traveloka app.

The meteoric rise of Qoala in a country that is traditionally slow to embrace insurance offerings is emblematic of the growth of insurtech platforms across Asia, and the potential of this market to flourish in the years to come. Singapore and a couple of Indian cities have become hubs for insurtech innovation, with many startups basing their operations there.

Singapore boasts the largest concentration of companies, including insurance plan comparison site GoBear, premium life and health insurer Singapore Life, and PolicyPal which last year introduced the first-ever group insurance platform for small and medium enterprises (SMEs).

Hong Kong has eight startups on its island alone, while insurtech firms based out of Shanghai have thus far secured the most funding, at over US$1.3 billion in total. The pioneer digital insurer in China Zhong An has amassed over 400 million policyholders, and in true disruptor fashion, is looking to expand its base by leveraging technology including blockchain, artificial intelligence (AI), cloud computing, and the Internet of Things (IoT).

The relative lack of maturity of the insurance industry in Asia means that many insurtech providers are able to operate and innovate with fewer regulatory controls than would affect them in more mature markets. While Singapore is heavily regulated with over two-thirds of the population insured, insurtech startups in China and India are relatively free of government regulation, but that is changing as startups in those countries show increasing promise and development.

Like China in the past, India was majorly under-served in terms of insurance penetration due to the low awareness and limited geographical reach due to the sheer size of the country. The recent uptake of smartphones and internet access has however made it easier to reach prospective customers, even in the most rural areas.

Indian e-commerce platform Paytm and insurance policy aggregator PolicyBazaar have both found tremendous success on the subcontinent pushing cheaper and more flexible micro-insurance plans, and attracting lower-income policyholders with a plethora of niche coverage plans such as crop insurance and dengue insurance.

Another Indonesian startup PasarPolis has features such as a three-minute quick claim (with digital document verification) and is integrating with ride-hailing apps GET and Go-Viet to provide travel and e-commerce delivery insurance, as it expands its services into Vietnam and Thailand where it will be focusing on the B2B2C market.

Insurtech firms are overcoming unique challenges in different parts of Asia, be it refining products in Singapore, or reaching previously untapped prospects in Vietnam.

In the present climate, the potential reach of insurtech disruption cannot be underestimated. If its ability to succeed in the current tough business climate is an indication, we could expect to see the Asian insurtech industry explode in the years to come.

Indonesia Fertile Ground For FinTech

Indonesia’s Fintech sector has been growing steadily, however, the majority or over 70% of the country’s adult population is unbanked or underbanked.

This suggests that Fintech businesses in Indonesia have a good opportunity to provide modern financial services to the nation’s consumers.  The country’s emerging digital financial services sector had been doing quite well, even before the COVID-19 outbreak – which has caused people to switch to online or all-digital platforms instead of visiting physical bank branches.

More than 60% of Indonesia’s 270 million residents are within working age, which represents a significant market for Fintech lending projects. According to a recent survey, over 70% of Indonesian SMEs are now accepting or will take digital payments within the next three years, however, 80% of SMEs revealed they don’t have access to reliable and affordable credit.

Approximately 50% of Southeast Asia’s population is based in Indonesia, which suggests that the country’s residents could be an ideal market for Fintech lending platforms.

Various lending models including peer to peer (P2P) microtransactions, productive/consumptive, and offline to online (O2O) are being adopted by Indonesian Fintechs.

Amartha is one of the most widely-used P2P micro-lending solutions in the country. It allows people to take out small loans that are issued to several different borrowers (around 15 to 20 consumers). These smaller loans are well-suited for people residing in remote areas, where it may not be as easy to obtain financing when compared to big cities.

Online wallet Go-Pay is another popular “super-app” which comes with an option to access ride-hailing services. Go-Pay’s digital wallet may be used to conveniently make digital payments and access credit transfer facilities.

Indonesia’s Bank Central Asia, the largest lender in Southeast Asia, recently reported a 91% annual increase in mobile banking transactions, following the Coronavirus outbreak.

Who Is Sindhutai Sapkal

Sindhutai Sapkal was nine months pregnant when her abusive husband kicked her in the stomach in a fit of anger. He then dragged her out of their house in Wardha district, Maharashtra, and pushed her into the cow shed. So traumatized was the 20-year-old that she went into labor and passed out after giving birth. When she regained consciousness, Sindhutai realized she had to cut the umbilical cord herself since there was no one to help her. To do so, it required 16 blows from a stone she found in the cow shed. Although she was exhausted and still in pain, Sindhutai cradled her newborn daughter in her arms and walked a few kilometers to her native home hoping to find refuge. But here, too, she was turned away. 

Hungry and homeless, Sindhutai was forced to take shelter in a cremation ground. As she walked alongside the funeral pyres to find a safe place to rest, she stumbled upon wheat flour left behind by relatives for their loved ones. When darkness fell and there was no one around, Sindhutai collected the flour and baked roti (Indian bread) on the burning embers of the dying pyres to feed herself. When it became difficult to survive in this manner, she took to begging and singing devotional songs at temples and railway stations to keep her and her infant daughter alive.

One day she found a baby crying beside his dead mother on the railway platform. Deeply moved by his plight, Sindhutai took him under her wing, after the authorities refused to take him. Since then her life changed. She began sharing whatever she earned to feed abandoned and orphan children. As their numbers grew, Sindhutai began to beg more and more so that she could give the children a loving home and a good education. Over the last 50 years, Sindhutai has transformed the lives of over 1,400 orphans, many of whom are now doctors, academics and lawyers. Sindhutai has 282 sons-in-law, 48 daughters-in-law, and over 300 grandchildren.

“I cried a lot after I was thrown out. I also thought of ending my life many times when I was unable to cope. But the day I understood the mission of my life was to care for orphaned children, I stopped crying and started living for them. I’m 70 years old and still begging. The only difference is that I don’t beg for a living in front of temples any more. I give public talks and ask for money for my children. Only when I give a bhashan (talk) do they get rations. This is the way the orphanages run,” says the silver-haired Sindhutai.

PolicyStreet Eyes Expansion - Indonesia & Indochina

Malaysia-based insurtech startup PolicyStreet has raised US$1.8 million in series A investment in a round led by existing backer KK Fund. The investment round also saw participation from another Singapore VC fund, Spiral Ventures. PolicyStreet gained the support of both international and local angel investors through equity crowdfunding platform PitchIN.

Launched in 2017, PolicyStreet’s online platform enables consumers and businesses to choose and purchase insurance policies based on their needs. It also uses a hybrid offline-to-online operating model to communicate insurance complexities to its customers.

In 2019, the company obtained approval from the Central Bank of Malaysia to become a financial adviser and Islamic financial adviser, allowing it to work with over 35 insurers and offer more than 1,000 insurance products.

With the new funds, the startup plans to further improve its product, increase sales and marketing efforts, and expand into other emerging markets in the region. PolicyStreet is currently looking into entering Indonesia as well as Indochina within the next six to 12 months.

The firm has seen a shift in the type of insurance products its users are searching for and buying amid the pandemic, moving from travel insurance to medical policies. Its sales for the first quarter grow by 580% year over year.

Since its inception, PolicyStreet claims to have reached roughly 225,000 customers, selling 36,000 policies worth roughly US$832.8 million. Its partners include Great Eastern, Allianz, Zurich, AXA, and Manulife.

With its Southeast Asian expansion plans, it is primed to go up against other startups such as B Capital-backed CXA, Gojek’s GoSure, AMTD-backed PolicyPal, and Singtel-backed Igloo (formerly Axinan).

Who Is Kamalamma

It's been over two months that India has been relentlessly fighting the battle against coronavirus. 

In this fight, people from all quarters of the society have pitched in. One such contribution was made by 70-year-old Kamalamma. Kamalamma, a resident of Chennagiri Koppal in Mysuru, who receives Rs. 600 pension per month donated a huge chunk of remuneration to an NGO in the city. 

Though the organization's members asked her to keep the money, she insisted them to take the money to help the needy. 

The photo of Kamalamma donating money has surfaced on social media and appreciations have been pouring in. Kamalamma donated Rs. 500 from her pension. This amounts to 90 per cent of the sum she receives. Making the donation she said, "It is a small amount but please accept." She donated Rs 500 from her old-age pension to Chief Minister's COVID-19 Relief Fund.

On 12 May, members of the organisation, Rotary Heritage of Mysuru, India were busy with their Annadana (giving of food, supporting and maintaining) preparations when a seemingly poor elderly woman walked into their premise.

They expected her to ask for some food and extended some food packets to her, but she refused to take them. Slowly, she mustered up the courage and took out some money hidden behind her clothes and handed it over to them.

“I have been watching you guys supplying food to my area for over 30 days now, so I just felt I should give you Rs 500 from the Rs 600 monthly pension I receive. It is a small amount but please accept it,” Kamalamma said.