Hey folks! InsurTech Tribe crossed 500 subscribers last week; thank you very much for the (Twitter) love! Today’s piece will cover a few topics - let’s jump right in..
Drone Insurance in India
The ‘Digital Sky’ initiative got off to a rocky start but there are signs of traction now - the DGCA (India’s Aviation Authority) has issued licences for BVLOS (Beyond Visual Line of Sight) flight. Permitting BVLOS flight trials (~100 hour limits) is a huge step forward - several commercial use-cases (e.g. food delivery, emergency medical supply delivery etc) require pilots to control drones from ~5 kilometers away.
Consortia that have been approved for BVLOS trials include [1]:
SpiceJet (airline carrier)
Dunzo (hyperlocal delivery)
Swiggy (food delivery)
I would love to speculate on airline companies “diversifying” into drone fleet management but this is an insurance newsletter; so I’ll pretend I didn’t make this comment.
Whilst drones have literally been ‘taking flight’ in India, so has insurance for these autonomous vehicles. TropoGo was 1st to market with a product in conjunction with HDFC Ergo.
For those of you wondering, ‘riding’ any motorized vehicle does require (Third Party) insurance - in a similar fashion, drone pilots require Third Party Liability insurance - imagine cutting a wire line or hitting a street lamp which leads to someone getting electrocuted. I think you get the picture!
Whilst TropoGo’s 1st product was focused on WLOS (Within Line of Sight), it’s 2nd product (this time with National Insurance) is for BVLOS flight. In addition, the IRDAI (Insurance regulator) has constituted a Working Group on creating guidelines for drone insurance.
Couple of thoughts regarding why drone (insurance) is exciting:
Drones are expected to generate ~ $850M in economic value in India for FY 22 [2] across use-cases such as defense, delivery and disaster response.
Viable business models in delivery? Current Swiggy drivers can do ~2 deliveries per hour due to ~30 min pick-up & drop-off times; drones can do this *much* faster & at lower costs (especially in crowded metros).
Do note that drones under the BVLOS pilot *cannot* carry a payload [3] - so the drone based delivery model may be ~1 year away.
From an economic lens, India’s ‘Digital Sky’ opens up an infinite-layer highway for logistics - as the industry transitions from 2D to 3D, there will be several opportunities for start-ups too (my personal favorite is Flock Cover)
We’re half-way through this round-up, if you have found it interesting thus far, please do consider subscribing!
News from China
Shuidihuzhu (水滴互助) [read as ‘Waterdrop’] has raised a $230M Series D led by Tencent and Swiss Re [4]. This is the same company that raised a $74M Series B and a $144.5M Series C in 2019 [5].
The company hosts a ‘mutual aid’ platform i.e. alternative health insurance where members contribute towards health insurance claims of other members within the same pool.
Founded in 2016, the platform has paid out ~$234M in claims to 12,980 claimants. It has ~80M mutual aid members and ~300M MAU (which stems from its crowdfunding/donation platform where users can make appeals for causes).
How does mutual aid work?
You sign up and get allocated into a ‘pool’ (depending on your age & health conditions); all of the below is hosted on a WeChat mini-program.
For Shuidihuzhu, you must maintain a balance of ~ ¥ 9 (i.e. $1.25) in the ‘wallet’ (typically hosted by Ping An’s Depository Bank).
Four times per month (i.e. weekly), all claim requests that have been made are verified by the Shuidihuzhu staff and made public for all other members to audit.
Assuming no one objects, these claims are settled and members are billed their pro-rata contribution i.e.
If your pool (30-40; no pre-existing diseases) had 2 claims this week of ¥ 100,000 total and your pool has 100,000 members - you pay ¥1.
Your contribution is capped out (age & cover specific) and benefits are capped.
I don’t want to redo the fantastic work that FT did in interviewing customers of Xiang Hu Bao (Ant Financial’s mutual aid platform) - but, there is promise that mutual aid is capturing bottom of the pyramid customers, offering a low cost alternative & building the ‘top of funnel’ for insurance purchases.
Shuidihuzhu was founded by previous Tencent executives so it doesn’t surprise me they are heavily backed by Tencent; and in this “proxy war” against Ant Financial’s Xiang Hu Bao.
Mutual aid is a multi-layered topic so if you like, I’d be happy to delve into this in more detail in a full piece.
Tesla’s Tryst with Insurance
On a less serious note, Tesla now owns its own insurance brokerage in China! Musk may not have a good history with insurance but times change very fast in the Tech world.
Given Tesla’s new giga factor in China & the focus on bringing insurance in-house, this move didn’t surprise me much (they also sold 11,000 Model 3’s in June [6]) However, I do fear for the medium term where the Chinese Government has withdrawn EV purchase subsidies.
In the UK, ByMiles put together a great Tesla insurance product with La Parisiennes in December 2019 [7] in California, Tesla has its own insurance.. previous attempts using carrier partners lead to very high renewal costs (due to Tesla repairs being very expensive and claims being driven by unforced errors on the drivers part i.e. being side-rammed by another driver).
There’s a ton to ramble about Tesla and Insurance but Musk prefers to act rather than talk so I’ll keep my eyes opened (to see memes as below)
That’s all from me for this week! If you found this interesting or useful, please feel free to comment, share or like. As a side note, something’s cooking :-)
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