How full-stack insurtech platforms can revolutionize health insurance in Indonesia

Indonesia launched a universal healthcare program in 2014 as part of its efforts to reform its healthcare system. However, when it comes to providing broader protections for citizens, such as through private health insurance, the country still has some ways to go.

It’s estimated that private health insurance penetration in Indonesia is only at 4%, which brings the country’s overall insurance penetration rate to just 3.23%.

This is significantly lower than the global average of 7.3% and places Indonesia behind other countries in the region such as Singapore (9.5%) and Thailand (5.4%).

With this gap in the insurance market, insurtech platforms have stepped in to provide insurance products through online channels. However, while this has given consumers more options when it comes to obtaining health coverage, the industry is still plagued with problems that have kept health insurance penetration rates relatively low, says Evan Tanotogono, CEO and co-founder of full-stack insurtech platform Rey.

Missing the middle class

According to Tanotogono, one of the biggest reasons for the slow uptake in the industry is that many health insurance products aren’t a good fit for a significant portion of the population.

Currently, about 52 million middle-class Indonesians fall above the income criteria to qualify for social welfare programs that subsidize healthcare costs, but they are also priced out of private insurance products, he explains.

Photo credit: prpicturesproduction / 123RF

One possible reason for this is that some insurtech companies may partner with organizations that have many consumer touchpoints, such as banks. They do this to raise awareness for their products, but these partnerships may be too costly to maintain. Subsequently, the additional costs are passed on to consumers through higher premiums.

On top of that, some companies may try to add “gimmicks” – such as international emergency assistance or helicopter evacuations – in an attempt to justify these high prices.

“All these gimmicks make the product more complex,” Tanotogono continues. “You‘ll [end up] pushing people away from it.”

Evan Tanotogono, CEO and co-founder of Rey / Photo credit: Rey

The business model of existing platforms is also a major issue, as it limits how innovative and flexible they can be.

That’s because many insurtech platforms in Indonesia act as distributors or enablers, which means that they either connect consumers with insurance products or offer tech solutions to empower existing providers.

However, they don’t actually conduct any of the underwriting for the products they carry, which stifles their ability to create new solutions that are more suited to consumers’ healthcare needs.

Tapping into personal needs

How can insurtech companies break free of this mold and provide middle-class customers with the products they need?

For Tanotogono, the answer lies in full-stack insurance platforms, which cover the entire value chain in the insurance ecosystem. Such platforms are licensed to underwrite and create their own products and can design their own claims processes as well. This allows them to address the health insurance needs of consumers much more efficiently.

For example, Rey provides users with a personal debit card called ReyCard that simplifies inconvenient hospital payments processes.

Tanotogono, with the rest of Rey’s founding team, demonstrating how to use the ReyCard at a press conference / Photo credit: Rey

Tanotogono says that Indonesians mostly have two options when it comes to hospital bill coverage. The first allows the insurer to pay the bill directly, but limits consumers to hospitals that the insurer has partnered with. The second allows consumers to select the hospitals they want, but they will need to pay out of their own pocket first.

With ReyCard, however, users can immediately have their bill covered by the platform at any hospital in the country. This is a boon for middle-class consumers who don’t want to pay upfront but need flexibility when choosing a healthcare facility.

Full-stack platforms also provide additional services or products outside of direct coverage, which add a lot more value to the platforms’ offerings.

This is crucial because health insurance is a lot more personal to consumers than other types of insurance, Tanotogono shares. When people think about health insurance, they consider not only how to guarantee that they’re covered financially but also how to prevent relying on these policies in the first place.

“Maybe, if people are trying to cut in front of me and hit my car, I’ll think it’s fine because I have [auto] insurance. But nobody does that with health insurance,” he points out. “If you’re running and there’s a tree falling in front of you, are you like: ‘Oh, it’s fine, I’ve got insurance.?’”

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By providing health-related services or products, full-stack insurtech firms become more relevant to consumers by inspiring them to take care of their own health. For example, Rey rewards users with an in-app currency for reaching their daily steps target. The currency can then be exchanged for gift vouchers.

With full-stack platforms providing a complete suite of health insurance products and associated services, Tanotogono believes that these companies can not only offer more value-added products to consumers, but they can also transform health insurance from just a product to an experience and service.

Rethinking the health insurance industry

While the full-stack health insurtech industry is still nascent, especially in Indonesia, Tanotogono notes that there are encouraging signs that indicate a strong potential for growth.

In Thailand, another full-stack platform called Sunday recently raised US$45 million in an oversubscribed funding round. And in the US, full-stack companies were responsible for US$711 million out of the US$1.2 billion raised by all insurtech companies in the country in 2018.

That said, there still remains a large obstacle for full-stack platforms, and it isn’t so much the incumbent insurtech players, Tanotogono says.

Rather, it has to do with how poorly insurance products are designed and sold as a whole. Tanotogono hopes that full-stack platforms such as Rey can lead an industry-wide change so that middle-class consumers can finally find suitable insurance products for their needs.

Rey is a full-stack insurtech platform that provides users with health insurance products and end-to-end health services. Its goal is to design optimal life, health, and critical illness insurance offerings by leveraging technology platforms and digital health ecosystems, so that insurance is easy to understand, accessible, affordable, and hassle-free for everyone.

To find out more, visit its website.

This content was produced by Tech in Asia Studios, which connects brands with Asia’s tech community. Learn more about partnering with Tech in Asia Studios.