Awareness must blossom for insurtech to prosper

The country is a potentially developing market of Southeast Asia with a young and technology savvy population, and a stable increase in the number of middle-income people. In addition, the population structure of Vietnam has many different target groups with different insurance needs, which is a great opportunity for Igloo to design and customise suitable products to meet the needs of each group.

Tri Nguyen, Vietnam country manager, Igloo

Currently, the insurance penetration rate in Vietnam is below 3 per cent, much lower than 9.6 per cent in developed markets. Average insurance spending per capita in Vietnam is currently around $75, compared with $175 in emerging markets and $4,664 in developed markets.

Vietnam’s insurance industry as a whole is expected to reach $3.5 billion by 2026, according to analytics firm Global Data, while revenue from insurance technology products currently accounts for only 2-3 per cent revenue of the entire insurance market, the insurance industry itself in Vietnam is very young and has not been fully exploited.

Especially after the pandemic, Vietnamese people have paid more attention to insurance products, especially health insurance, as well as becoming more familiar with online consumption, the level of willingness to purchase online insurance products has increased significantly.

On the macro side, the Vietnamese government's policies in promoting digitisation in all fields, including insurance, have created a more favourable environment for technology companies operating in the insurance sector.

Those reasons have made Vietnam one of Igloo’s key markets, and Vietnam is always among our highest performing markets. This impressive result has proved the effectiveness of the business and investment strategies that the Igloo team has been implementing in Vietnam, as well as the importance of Vietnam in Igloo’s development strategy throughout the region.

Notwithstanding, besides the great potential of the market, the challenges that the insurtech companies are facing are also huge. Firstly, the awareness of Vietnamese people about insurance is still low, leading to low confidence in insurance and a low rate of insurance participation among people. Therefore, insurance companies need to focus a lot more on education so that people understand the benefits of insurance.

Awareness must blossom for insurtech to prosper, illustration photo

We are one of the first insurtech companies investing in Vietnam. Being a pioneer offers the advantage of few competitors. However, it is also a huge challenge that Igloo faces in developing the market and educating users. To overcome those difficulties, since its early date in Vietnam, Igloo has focused on expanding its partnerships to different sectors by working with companies of all sizes, to take advantage of their capital, market share and rich products offerings.

Besides that, we have constantly created innovative products that are suitable for the needs of each customer segment. Only when customers find a product that meets their needs, and receive the benefits that insurance brings, they have confidence and are willing to participate.

The second challenge is that the high-quality human resources are not enough to meet the needs of Insurtech development. The current workforce is not prepared for the rapid change brought by digital technology, especially the staffing requirements for new industries such as data science, user experience design, or digital marketing.

Recently, Igloo has successfully secured an additional $27 million in its Series B extension, bringing a close to its Series B funding round at $46 million. With this fresh fund, we will continue to extend our product portfolio, looking for more opportunities to protect the underinsured segments in Vietnam.

We are also in the process of identifying and closing on various merger and acquisition opportunities to move faster towards our vision of insurance for all. In 2023, Igloo will continue to cooperate with important partners, in different fields, including e-commerce, with the goal of doubling the number of employees and tripling the number of agents.

In addition, Vietnam is the first country in the region where Igloo launched a blockchain-based Weather Index Insurance to protect paddy farmers. Igloo will also be the first in Asia to distribute insurance products through a leading convenience store chain in Vietnam, making insurance products more accessible for Vietnamese people.

Vietnam will continue to be Igloo’s most important market in Southeast Asia, and in the next 3-5 years, Igloo aims to become the largest insurtech company in Vietnam in both agency and business-to-business and business-to-consumer channels, towards becoming a digital technology insurance company in the near future.

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(*) Tri Nguyen, Vietnam country manager, Igloo