Prudential PLC has signed a deal with Indonesian-based financial technology OVO to launch a campaign to provide subsidized insurance to local consumers who might otherwise go uninsured.
OVO operates across Southeast Asia and provides payments, rewards and other consumer financial services. The Jakarta-based fintech was set up in 2018 by British entrepreneur and payments veteran Jason Thompson, who is CEO of the company.
Speaking during a presentation June 4 at the Money2020 Europe conference in Amsterdam, Thompson announced that the two companies signed an agreement that morning.
"This has been a real meeting of minds between OVO and the Pru," said Thompson, using the common shorthand for the venerable British insurer. "We will be using our platform to create education about insurance, and to drive the creation of micro-insurance for fast adoption," he added in an interview on the sidelines of the conference.
"I want to tell people [through OVO] this product is available, it's easy and it is for you," he said.
Insurance penetration is low in Indonesia, with only about 1.7% of the 265 million-strong population having any kind of insurance, according to data from the Indonesian Insurance Association, reported in 2018 by The Jakarta Post. A study released in October 2018 by Lloyd's of London showed that the country's insurance penetration as a share of GDP is less than 1%, and its insurance gap is the world's second-highest relative to GDP, at 1.4% or approximately $15 billion.
"We are aiming to provide simple solutions to problems such as a death in the family or a loss of income," Thompson said, adding that he is motivated by a desire to bring financial services for those who are excluded. "Our philosophy is simple problems, simple solutions and scalable products," he said.
However, he also said he is uncomfortable with the phrase "financial inclusion" because he feels it is euphemistic.
"People [in financial services] don't like talking about poverty, which is what we are really talking about when we say 'financial inclusion,'" he said.
Partnerships with large incumbent financial institutions are likely to be at the heart of OVO's drive to create financial products for the mass market in Southeast Asia, Thompson said: "We're embracing partners. Banks, online marketplaces, retailers. We can't do this on our own."
Prudential and OVO are still finalizing the exact terms and scope of the partnership, Thompson said. Shariah-compliant insurance to meet the needs of Indonesia's Muslim majority is something that the pair will be "working towards," he added.
Prudential is in the process of separating its operations into two business units. The U.K. and Europe business will be spun off into an entity called M&GPrudential, while the existing Prudential PLC entity will retain the U.S., African and Asian operations.