Bandboo isn’t the first insurtech startup in Singapore, but it is certainly one that has caught our eye.
This startup doesn’t sell insurance plans without agent hassle, but retrenchment insurance. I.e. if you get retrenched, the team will pay you 3 months of your salary, capped at $18k.
Co-founded by 4 friends, Ng Zhong Qin, Ou Zhiqu, Ashley Kee and Chee Chun Woei, Bandboo might only be a few months old, but they’re already making waves for their unique model of retrenchment insurance in Singapore.
How Bandboo works is that it collects a yearly premium upfront ($420 or $35/month), as well as monthly $9.99 service charge. Essentially each Bandboo member pays $539.88 / year in total.
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Members are grouped into pools of 1000, where premiums are pooled to $420,000. Say one member with monthly salary $x gets retrenched, their payout would be $3x, and the premium balance becomes $420,000 – $3x.
The $3x payout will be spread out across 5 months, and unlike other insurance platforms where you never see your premium again, Bandboo rebates the money.
Members who did not file claims will be returned premiums with 80% savings (premium balance divided by 999). And in the case where more than one member gets retrenched, the Bandboo team assures they have a system in place to spread out the risk.
This comes as an assurance to many, given Singapore’s rising rates and lowering age for retrenchment (which we covered here).
“We were inspired by a children story in which a father taught his kids strength in numbers by asking them to break a chopstick individually, and subsequently to break a bunch, which was much tougher.” – Ashley, CEO of Bandboo.
Bandboo launched in May 2017 to disrupt the insurance industry with 2 products: peer-2-peer (P2P) insurance for retrenched adults, as well as a retrenchment benefits scheme for businesses.
The team wants to help working adults below 40 with heavy financial constraints such as mortgages and children. These are also the people with the least planning, CEO Ashkey Kee told Channel NewsAsia.
The aim of their P2P insurance is to create “insurance powered by communities”, where the more members they have, the stronger the platform becomes.
By spreading out the payouts, they can “give someone time to get back on his feet, pay bills as he looks for a new job and not have to accept the first one that comes his way, which may not be suitable”.
“The insurance industry has too much fat in it. The profits may be a bit excessive for the insurance companies, and they’re not as efficient as they can be,” Ou told Tech in Asia.
But for those looking to abuse the system, be warned that you have to be a member for at least 6 months and in continuous employment for at least 9 months. And as per any other company, the team does do a rigorous checking of the claim, such as salary details against CPF contributions.
“We believe these factors would be a good enough measure to deter people who would buy such a policy for the sake of taking advantage of the payouts,” Kee says.
Another trust factor for the team is their unheard-of level of transparency. Other insurance companies do not return your premiums, neither do they show you their inner workings. Bandboo does both.
Their system works on the blockchain. This provides “total transparency with users, showing them exactly how premiums are calculated, paid out and how much rebate [the team] will give back at the end of the membership term”.
“If you look at other insurance companies like AIA, they’ll never show you what’s in their books, they’ll not show you what’s the breakdown of the premiums.”
The team is also looking to integrate smart contracts to automate the claims process so members can enjoy more efficient payouts.
Feasibility And The Future
Starting up was not easy, especially with industry incumbents and team’s sore lack of resources (obstacles they overcame with technology).
Sign-up rate has been low, but the team is optimistic about getting 1,000 members by end-August to launch their retrenchment insurance in Singapore.
Educating Singaporeans about P2P insurance has been a challenge, the team admits, and there are questions about how sustainable payouts will be with high retrenchment rates – a situation that will likely incur higher premiums.
The future isn’t limited to retrenchment insurance either, with the team planning to work with partners just like how China’s Zhong An hit pay dirt with Taobao.
Our platform “enables users to form digital communities to obtain insurance without actually going to a company. We can work with anyone so long as they are able to provide the community to us,” and their future lies in offering a “full suite of Insurance products”.
Insurance is often considered a burdensome necessity, “so we want to redesign the products with the consumer in mind.”
“Our P2P model will be the first step to changing [this] industry.”
Featured Image Credit: Ashley Kee