Oona Insurance eyes Thailand and Vietnam as S-E Asia economies near US$5,000 per capita milestone

[JAKARTA] Oona Insurance – a Singapore-headquartered general insurer founded in 2021 and backed by private equity firm Warburg Pincus – is ramping up its South-east Asia expansion, according to its top executive.

Group chief executive officer Abhishek Bhatia told The Business Times that Oona plans to launch a new slate of products to tap the region’s rising per capita incomes and shifting consumer habits.

Already present in Indonesia and the Philippines, the company is targeting acquisitions in Thailand and Vietnam, while also eyeing further deals in its existing markets. 

“Whenever we find companies that we can integrate with what we already have... where the company may (have) some technology and some capability, which we will take some time to build organically, then we are keen,” said Bhatia.

“We are constantly on the lookout for opportunities but Thailand and Vietnam would be the two other markets that we aim to get into next.”

Oona is bullish on South-east Asia primarily, noting that several economies in the region have either reached or are approaching the per capita income threshold of about US$5,000 – a level often regarded as a tipping point for financial service providers.

“Specifically for insurance companies, historically US$5,000 per capita has been the watershed moment as below that, there isn’t enough wealth for people to spend on insurance,” Bhatia explained.

In just over two years, Oona has turned profitable in Indonesia with top-line growth of 8 per cent in 2024, while the company delivered profit after tax of 80 billion rupiah (S$6.3 million) last year.

This was achieved by leveraging technology and introducing new micro health insurance products such as cancer insurance for just US$10 a year and cyber insurance for bank transactions.

According to Bhatia, South-east Asia’s general insurance market is ripe for disruption if companies can marry new technologies with existing channels using sales agents.

Looking ahead, micro general insurance products are poised to grow exponentially as traditional bundled general insurance products are phased out.

“We are rethinking and reimagining general insurance products,” he said. “Embedded insurance products such as cyber insurance are enabled by technology and we have more such products coming online soon.”

The idea, he noted, is to simplify complex insurance products such as critical illness coverage typically offered by traditional players. Oona sells individual policies for specific conditions, such as cancer, stroke and heart attack, at lower premiums, allowing customers to choose exactly which illnesses they want to be covered for.

“In South-east Asia, with its young demographics, such products have a huge potential for exponential growth,” Bhatia said. “The young buy travel and health insurance products much earlier in their lives, which means we have a longer growth trajectory.”

Indonesia’s general insurance market is estimated to be worth US$6 billion and is growing at a more than 10 per cent compound annual growth rate per year. Therefore, it will double every 10 years.

As a whole, the country’s financial sector is growing at between 2 and 3 per cent above gross domestic product per year.

Claims nightmare

One of the biggest challenges facing general insurance companies in Indonesia and the region is the existence of bad actors that do not exercise discipline in underwriting and thus often default on claims. This undermines consumer trust and confidence in insurance companies.

According to the Association of General Insurance of Indonesia, general insurance claims reached 33.38 trillion rupiah as at September 2024, an increase of 18.5 per cent year on year. Rising healthcare costs, in particular, have had a huge impact on general insurance companies’ financial stability.

Harry Su, managing director of research and digital production, Samuel Sekuritas, said: “Claims are problematic for the general insurance sector and it’s extremely tough for insurance companies.”

To combat this problem, under new regulation from the Financial Regulatory Authority, policyholders will be required to cover at least 10 per cent of the total outpatient or inpatient care incurred at medical facilities. The new regulations came into effect on Jan 1 this year.

“We foresee a rising number of mergers in this sector, especially as the Financial Regulatory Authority has raised the minimum capital requirements for insurance companies,” said Su.