How this startup is making insurance affordable and social

This article is part of Tech in Asia’s partnership with Disrupting Japan where we publish the revised transcripts from the show’s podcast interviews with Japanese entrepreneurs. This is heavily revised from the original transcripts. For the full interview, go here.

The insurance industry is really resistant to innovation. It was largely developed in the 17th and 18th century, and it hasn’t changed a whole lot since then.

Most of the change is driven by regulations rather than entrepreneurial innovation. And I have to say that I’m pretty much OK with that for insurance. But still, there needs to be a way to innovate.

Kazuya Hata is the founder and CEO of JustInCase. The startup offers insurance over smartphones, which is the first product they’re insuring. It uses AI to analyze your usage profile and social connections to determine the premium you should be paying.

In this interview, Hata and I talk about how their product works, the next logical step for smartphone-based insurance, and his thoughts on regulation.

Kazuya Hata, founder and CEO of JustInCase

What made you decide to start a business?

Prior to founding JustInCase in 2016, I was working as an actuary at Milliman.

I wanted to be a mathematician when I was 18. So, I went to university where I found that everyone was a lot smarter than me. I thought I had to do something different. Since then, that has become my strategy in life, leading me to do an insurance tech business.

Moreover, from the time I founded JustInCase, it has become more common to build a startup and be funded by VCs or angels. But everybody was building startups outside Japan and not inside the country, so I thought, “Why not?” I wanted to do something that nobody was doing.

Tell us about your product.

We’re offering basic cellphone repair insurance for as low as JPY 200 (US$1.77). We cater to both brand-new and older smartphones, but our current policy is only up to iPhone 5s.

Our app uses AI to track the user’s interaction with their smartphones to determine their risk level and the insurance premium. It monitors things like information from the smartphone’s sensors, number of steps you walked today, and the distance from your movement. We also use GPS for location information when necessary.

In terms of social connections, we’re still in the middle of processing that with the Financial Services Agency (FSA), but we don’t plan to use them initially because it’s more complex.

Do you think there will be resistance to the idea of people being judged based on their social network?

Yes, it’s potentially quite controversial. But we won’t be using that information only; we’re using multiple pieces of information to determine the premium. Some people might not like the concept of dynamic pricing, so we are trying our best to make it better for most people.

How do you go about collecting data from first-time users?

When a first-time user signs up, they can avail of the smartphone insurance for three months at a fixed premium. After that period, we give them an unclaimed discount amount which they can use for the next period.

Do you see a time when people will be able to buy insurance for just a few days or hours?

You use the concept of P2P insurance pools. How does it work?

How do you think this will make you profitable?

Do you think the regulators are supporting innovation in the insurance industry now?