Sompo Group’s startup strategy to digital transformation
By Karamjit Singh December 24, 2021
- Investment in Cover Genius to expand its embedded insurance market
- Help accelerate digital transformation & agility, create new business models
Continuing a strategy that has seen it make a number of startup investments as a way for it to tap into the disruption happening in the digital economy, Sompo Holdings (Asia) Pte Ltd (Sompo Asia), a wholly owned subsidiary of Japan based Sompo Holdings, announced in late Sept a US$50 million (RM205 million) investment in Cover Genius, a leading insurtech firm and embedded insurance startup.
Explaining the rationale for the Cover Genius investment, Tan Sek Kee (pic, above), CEO of Berjaya Sompo Insurance Bhd says the Sompo Group believes in investing in companies that have, “demonstrated their capabilities and share a similar vision to widen distribution capabilities, and advance Sompo’s digital transformation and agility.”
It also helped that they already had a collaboration on some projects with Sompo impressed by Cover Genius’ global capabilities where it has established a market position as a leading full stack insurtech for embedded insurance with some of the world’s largest digital companies as clients.
The strategic investment in Cover Genius is one of the many innovative initiatives Sompo has established since it began investing in startups in 2016 as part of its strategy to harness leading-edge digital technologies for its digital transformation and creation of new business models.
It is a transformation journey with active participation by Sompo in the creation and ideation process with its startup investees, explains Tan. In this instance with Cover Genius, “We foresee close collaboration between executives and talents of both companies as part of this strategic partnership; and will look to support each other through capabilities including product development (expand product sets in new geographical markets or product verticals), underwriting capacity, access to new markets and other knowledge transfers, and more,” Tan explains.
Adding such digital capabilities and products to Sompo’s portfolio has taken on an urgency in light of opportunities opening up within the embedded insurance space, especially in APAC. Despite it being a diverse region, trends shaping up have shown rising consumer appetite for digital consumption.
“We have seen an increase in customers who prefer virtual services alongside a heavy reliance on online services. For example, young digitally savvy consumers are open to switching to a new provider, including companies beyond the insurance industry such as retailers and technology firms,” says Tan.
In Malaysia, Tan sees further tailwinds from the support of the authorities and government for innovative solutions and outreach within the fintech and insurtech space, with Bank Negara Malaysia’s regulatory sandbox, one example of encouraging startups to enter the market with innovative products and services.
As a result, “while the insurance market continues to remain reliant on traditional channels, we have seen a surge in digital preferences with insurance sales via online distribution growing 32.6% year on year according to an Insurance Services Malaysia Bhd report in H12020,” says Tan.
Looking at this picture, Sompo sees an opportunity to offer end-to-end insurance products within a broader technology ecosystem, offering solutions such as embedded insurance as a new way to distribute insurance services efficiently.
“As we tap into more diverse and wider distribution channels globally, our goal is to not only realize digital innovations but most importantly, bring delight to our customers,” he says.