The embedded insurance sector is poised to grow significantly in Southeast Asia in 2023

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The insurance penetration rate is relatively low across the Southeast Asian markets. This represents a market with significant headroom for growth in 2023 and beyond. In addition to low insurance penetration, the increasing demand for affordable insurance products owing to a surge in awareness among the rising middle class will also aid the embedded insurance growth in Southeast Asia in 2023.

To capitalize on the projected growth opportunity in markets like Indonesia, Thailand, and Malaysia, providers are launching innovative products and forging strategic alliances with relevant ecosystem players to serve the day-to-day insurance needs of customers across the region.

• PasarPolis, for instance, launched an innovative digital platform Tap Partners. The service has been designed to provide offline merchants with a channel to sell embedded insurance products. This solution will not only empower merchants to offer comprehensive insurance coverage to their customers but is also expected to aid the industry growth in Indonesia.

With these innovative service launches, PasarPolis has continued to cement its position in the fast-growing embedded insurance sector in Southeast Asia. Through its collaboration with Tap Insurance, PasarPolis is also able to underwrite its own product. This makes PasarPolis one of the full-stack insurtechs in Indonesia. In 2022, the firm issued 500 million insurance policies. The strong network of 40 embedded insurance distribution partners, along with the ability to offer new products, means that the firm is well-poised to surpass the 2022 figures in 2023.

Amid the growing competitive landscape, other embedded insurance providers are seeking to forge strategic alliances to issue more policies in the Southeast Asian region. Insurtech bolttech, for instance, announced a strategic collaboration with Tune Protect Group in April 2023.

• The partnership is aimed at offering device protection solutions to customers in Malaysia. The collaboration between the two firms aims to meet the growing demand for device protection and support services in the Southeast Asian market. While the device insurance coverage will be underwritten by Tune Protect, bolttech is appointed corporate agent and the provider of device support services.

Over the years, Singapore-based bolttech has emerged as one of the leading embedded insurance providers in the global market. It has a presence in over 30 markets in Asia and Europe, and across all 50 states in the United.

In another strategic collaboration, Tokio Marine Insurans announced a partnership with KirimMan and Finology. This strategic alliance is aimed at delivering affordable embedded insurance products for the gig economy in Malaysia, largely focusing on delivery riders. Notably, the embedded insurance product starts from MYR 1 per day and offers protection against accidents while on the job.

These strategic collaborations and the launch of embedded insurance products are expected to further aid the competitive landscape in the fast-growing Southeast Asian markets. Consequently, PayNXT360 expects regional providers to also seek growth opportunities in the global market from the short to medium-term perspective.

• In February 2023, PolicyStreet, another Southeast Asian insurtech firm, announced that the firm had received approval from the Australian Securities and Investments Commissions and had obtained the Australian Financial Services License. The license will allow PolicyStreet to offer financial product services for general insurance products to retail and wholesale clients in Australia.

While the firm is expanding its presence in the Australian market, it has announced that it is committed to serving the Southeast Asian market. Furthermore, PolicyStreet had also announced that it will leverage insights and data on upcoming trends from its Australian operations to better innovate and compete in the Southeast Asian region.

As the embedded insurance market continues to grow in Indonesia, Malaysia, and Thailand, PayNXT360 expects more innovative product launches and strategic collaborations to emerge in 2023. Furthermore, PayNXT360 also expects venture capital and private equity funding to grow in the segment from the short to medium-term perspective, as a relatively low-insurance penetration rate represents a market with significant headroom for growth. Overall, the competitive landscape and embedded insurance market are poised to record strong growth over the next five years in Southeast Asia.

To know more and gain a deeper understanding of the Asia Pacific embedded finance industry, click here.