RIO DE JANEIRO, BRAZIL – One of the insurtechs – a term that combines the English words “insurance” and “technology” – is Onsurance, which offers prepaid auto insurance.
Just as with a cell phone, the user places credits into their account and costs are deducted as the car is used. When the car is stopped, there is no deduction.
Unlike conventional insurance, variables such as the drivers’ sex and age are not taken into account when estimating the amount to be charged.
“It doesn’t matter if drivers are young or old or where they live. We install a device in the car that detects how the person drives, and then price adjustments happen. It’s more equitable. A person may be young and drive courteously,” says Adilair Silva, 35, a co-founder.
There is a minimum amount of credit to pay for the first charge, which varies according to the car’s model – for a popular one it’s R$1,199 (US$299,75), but the amount never expires.
The company estimates that its product is between 50 and 80 percent cheaper than that of a traditional insurance company, “As a result, we reach people who were not served by this service. Approximately 70 percent of clients had never had car insurance,” says Ricardo Bernardes, 43, founder.
According to 2018 data from the FENSEG (insurance federation), only 27 percent of Brazil’s fleet is insured.
Onsurance, based in Brasília, was founded in 2017 and employs ten people. The startup does not disclose how many clients it has, or the turnover, but claims to have insured more than four million minutes of driving.
ThinkSeg, which was launched in 2016, is changing its operations to offer a similar service, in which those who drive more pay more.
The company has stopped working with traditional insurance and is currently testing the “pay as you go” service with about a thousand clients.
The client will pay a monthly fee plus a per-drive rate, explains André Gregori, executive director. Each trip will be assigned a mark according to the caution at the wheel, measured by an artificial intelligence app. This will be reflected in the price of the fee.
“There is no transparency about what is paid in this market. You know that if you use more water and electricity you will pay more. Why can’t it be that way with [car] insurance,” asks Gregori.
The estimate is that, on average, the service costs R$90 for a popular car. The company, which has 108 employees and does not disclose revenue, has not yet anticipated how much the new service should yield.
But the change in the sector is not only in the automotive industry.
Pier, for instance, focuses on insuring cell phones. According to its founder, Lucas Prado, 30, the idea is that the platform works as a community, where only those who are invited can join.
Once approved, the insured pays monthly fees from R$6.10 for the service.
“There is a broken-down relationship between policyholders and insurers in Brazil, with red tape on one hand and fraud on the other. As we don’t have intermediaries, we can have a transparent relationship to explain exactly what we cover and how it works,” says Prado.
To approve or reject a member, the company assesses the applicant’s digital profile in addition to the credit score, using the information provided in the app for admission.
Pier’s distinguishing feature is the coverage of petty theft, something uncommon in the market. The thief does not break barriers in this offense, such as tearing a backpack, for instance, to subtract property. When they do, it’s grand theft.
According to a study by the company, based on data from the São Paulo Public Safety Department, 90 percent of cell phone robberies in the state are petty theft. And more than half of the 400 compensations already paid by Pier were for this crime.
Kakau Seguros is a pioneer as an insurtech focused on mobile phones and also provides home insurance. This way, the service can be “turned on and off”, which costs from R$19 per month.
“If someone goes on vacation and the house is empty or rents it on AirBnb, they can turn on the insurance only during this period and turn it off when they get back,” says Diogo Russo 37, a founding partner.
For Eduardo Glitz, partner at StartSe, an executive education company focused on the new economy, insurtechs are a trend.
“The technology eliminates intermediaries [in this case, brokers] and cheapens services. I think there may be a boom for these companies, just as there are for fintechs. The banking and insurance sectors are clustered.”