The current state of play

The insurance industry largely relies on brokers or agents selling insurance policies to customers and taking a commission in the form of a percentage of the premium. Usually the commission is paid by the Insurer and is not transparent to the customer.

Other models exist, including fees being paid by the customer in return for the premium being rebated down by whatever the commission element is, but the most common model in South East Asia is the commission based one.

Full transparency of earnings is therefore not promoted by the broker and the size of commission is often not disclosed to the customer. The commission may range from anything from 5% to more than 35% of the premium going direct to the broker or agent.

In many cases, the legacy brokers need to earn such a big percentrage of premium as they have built extremely high cost bases over time that they are unable to do much about. You will notice that the larger international brokers occupy the most expensive real estate in the financial districts of most cities and spend a great deal on marketing, sponsorship and branding efforts generally. They have extensive layers of management across all functions, in country and regionally - this adds up to a lot of headcount and expense that does not really make any positive impact on the customer experience or create value for money for the customer most of the time.

A particular feature of the industry is that policy performance in terms of benchmarking with peers, premiums & claims is often not fully transparent. A customer who sees he is paying away more premium than his peers or significantly more than the claims being incurred will be a lot more demanding of the renewal terms provided by the broker or agent and more likely to seek alternatives for price comparison. This eats into those high margins the broker or agent is making and so is something they try to avoid happening.

An agent for example will usually only be working with one, two or perhaps three insurers - local regulatory requirements usually prevent them dealing with more insurers than that. This means that as a customer of an agent you are almost certainly not getting the benefit of exposure to the broader insurance market and competition on price and innovation this creates. Why should you cut yourself off from the competitive landscape in insurance when you presumably would not do that in other aspects of your business ?

To help justify the income being earned and make it harder for a customer to change service providers, the broker or agent often takes on much of the administrative workload around such areas as premium collection, policy issuance, claims handling and day to day changes to policy terms.

The truth is that while this was fine in the past, we have now reached the stage whereby technology can allow much of this administrative process to be carried out efficiently, often directly between the customer and Insurer, without the need for a 'middle man' trying to maintain walls around a customer relationship to protect earmings.

Price transparency and online comparison is nothing new in most other finance related sectors, such as personal insurance (motor, travel, household), mortages, foreign currency exchange, stock broking & investment funds. The result has been an erosion of margins for the middle men in these industries with the cost savings passed on to the consumer - it is about time it came to business insurance also.

Unlike the existing legacy players, we have nothing to lose since we are an entirely new start up. That means we have no fear of cannabalising earnings from exisiting clients earning us high commissions or any structural costs built into our model, such as expensive office leases and layers of management & sales staff. We can operate a transparent, highly efficient and low cost online platform that will live and die by the value added to our customers.

In the majority of cases you will pay premium directly to the Insurer for example as this custs down handling time & cost considerably. Claims can also be handled directly wherever possible as the extra layer added by going via a broker or agent adds very little value to the process and slows things down for no good reason.

The end result is that our operating margins can be significantly lower per transaction and so the cost saving passed on in the form of lower premiums.

We believe the ARX platform will allow us to scale our business while bringing new levels of improved service to the insurance industry.

Where we are coming from

You're busy and insurance is often way down the list of things to worry about when managing a business - we get it and understand you don't want to devote unnecessary time to dealing with getting adequate insurance in place.

We wanted to think differently about how businesses purchase and then manage their insurance programmes by using technology to improve all aspects of the process.

Our goal is to provide total transparency through the application of technology and so shift the balance of power to the customer in what is at times an opaque and impenetrable industry.

Technology can also promote a greater level of efficiency and productivity around the time & expense involved in buying and then maintaining an insurance programme.

It is the two key drivers of transparency and efficiency that will result in a lower cost of insurance overall while improving the service experience considerably.

We want to help you access as much of the insurance market as possible to ensure you get the best possible pricing and overall value for money. In addition we then want to offer you the best possible experience around managing your insurance programme.

Our team is made up of experienced professionals from both the insurance and technology industries, specifically focussed on South East Asia. Having seen how the legacy insurance brokers and Insurers operate, we know we can make improvements to the whole process to add real value for the customer through the ARX platform.

We will not be sending you an automated 'API' sourced quotation from a narrow panel of Insurers. That adds little value other than limited price comparison and so we will still have real people adding value carrying out the hard work in terms of sourcing quotations from the market, negotiating with Insurers and giving advice & recommendations. This work will be carried out by the team at RPA Online, a division of PT Rajawali Pialing Asuransi, an established broker regulated by OJK.