SINGAPORE - Hoping to tap a fast-growing market, Grab has entered into a joint venture (JV) with a subsidiary of Chinese Internet-based insurer ZhongAn Online P&C Insurance Co to create a digital platform to distribute insurance products in South-east Asia.
The platform will offer a range of insurance products at reduced premiums to users through the Grab mobile app. It is slated to be launched in Singapore in the first half of 2019 before being rolled out in other markets.
ZA International, the entity for overseas business development formed by Hong Kong-listed pioneering insurance technology firm ZhongAn, will provide backend technological assets to build the platform.
In August last year, ZA International and SoftBank Vision Fund announced their cooperation to boost ZhongAn's technology solutions businesses outside China, with an initial focus on Asia. SoftBank is also a multimillion-dollar investor in Grab.
Grab and ZA International's JV will collaborate with global insurance partners to develop products that are tailored specifically to South-east Asians' lifestyle needs.
To start, in conjunction with Chubb, Grab will offer a drivers' insurance product to its drivers in Singapore to protect them from loss of income owing to illness or accident.
The tie-up will allow for insurance premium payments to be automatically deducted through GrabPay or its affiliate payment partners.
Reuben Lai, senior managing director of Grab Financial, told The Business Times that Grab sees a huge opportunity in the insurance distribution business in the region.
"If you were to look at the penetration levels, we are maybe around 30 to 40 per cent lower than markets such as China. And even though it's underpenetrated, the market size is about US$80 billion to US$100 billion right now, and that market is expected to double in the next few years," said Mr Lai.
Premiums can be offered at a more affordable rate because the customer acquisition cost is lower, owing to Grab's large user base in the region, explained Mr Lai. In addition, more precise user data will also better inform the insurance underwriting process.
Last month, investor Toyota announced that it will offer Grab a service that involves collecting real-time vehicle information for fleet management, among other functions - just one of the ways that the company has access to statistics on behaviour.
For Grab, the key to the insurance game will be offering users specific products based on how they have been using the app.
Instead of grappling with the big boys to distribute products like life insurance, Grab hopes to "break down these products into ways that consumers can consume efficiently and is relevant to them".
The firm aims to embed insurance in a contextual manner. So if a user were riding to the airport, Grab's mobile app might register that there is a high likelihood that the user is travelling, and suggest a travel insurance product.
"Most of us don't wake up and suddenly say that we want to get insurance. It comes to mind when it is relevant," said Mr Lai.
It could also explain why ZhongAn was chosen as a strategic partner - its main products include gadget insurance and insurance that online shoppers buy to cover shipping costs in case they decide to return goods.
Giving an update on Grab Financial for the year ahead, Mr Lai said that the focus will be on insurance, remittance and lending.
Grab in November announced an upcoming remittance offering that will allow users to remit money instantly and securely to receivers in another country using their GrabPay wallets.
The firm has received both its Singapore and Philippine remittance licence, which makes that likely to be the first corridor that it will target, said Mr Lai.
Grab is still building up the know-your-customer (KYC) system for the Philippines, but is expecting a launch of the remittance service in the first half of 2019.