Michael Alvin Saputra, COO PasarPolis (left) & Cleosent Randing, Founder and CEO PasarPolis (right)
Jakarta, February 4, 2021 — Indonesian workers and their families, including tens of millions that rely on the informal economy for their livelihoods, will soon have greater access to healthcare cover and other vital social safety nets, following an agreement that's set to boost the delivery of microinsurance at a time when the COVID-19 pandemic has underscored the challenges faced by the nation's most vulnerable.
Under an agreement announced today, IFC, a member of the World Bank Group, will provide PasarPolis, a pioneer in delivering innovative on-demand insurance products in Indonesia, with US$5 million in equity finance to develop infrastructure to connect insurers, digital platforms and customers unserved by the traditional insurance sector. This important investment will help PasarPolis expand its international network, its range of products embedded in the digital economy, deliver technology-based and cost efficient microinsurance products and further develop its partnerships with over 25 of Indonesia's leading digital platforms, which among others includes GoJek, Tokopedia, Kredivo, Pegipegi and Bukalapak.
The partnership between IFC and PasarPolis, which has so far issued more than 775 million insurance policies, will also promote financial inclusion and support expansion of Indonesia's rapidly growing digital economy, as well as foster competitiveness by leveraging partnerships with digital platforms to offer bite-sized, on-demand insurance products. By packaging contextual risks at low premiums, PasarPolis offers a microinsurance channel that can reach customers not served by the insurance sector in Indonesia, where a significant portion of the population hovers around the poverty line.
This announcement comes as the Indonesian digital economy is expected to triple to US$130 billion by 2025, driven by rapid growth in e-commerce, from ride-hailing services to online travel agencies. The rise of Indonesia's digital economy and new consumer patterns in Southeast Asia's largest economy has also created a significant opportunity for new on-demand contextual microinsurance products that are embedded within digital transactions.
"To date, the insurance gap and unequal distribution of insurance remain major challenges in Indonesia. Through the adoption of technology, we will continue to bridge the gap for people who previously had difficulty accessing these important insurance services," said PasarPolis Founder and Chief Executive Officer Cleosent Randing. "With IFC's support as our investor, we believe our mission to develop our technological innovations will be strengthened, enabling us to create more affordable and innovative microinsurance products that are easily accessible, including for the underserved community and those who live in remote areas," he said.
"This strategic collaboration with IFC, known around the world as a vital conduit for catalyzing private-sector investment that also lifts prosperity, is also an acknowledgment of the positive impact that we are delivering for many more individuals and households," Mr Randing said.
Not only is Indonesia the fourth most-populous country in the world, with a population of more than 270 million, it is also home to the world's fourth largest workforce, with almost 78 million Indonesians working in the informal economy, in casual and part-time roles as street vendors and domestic servants and running small businesses. Many of the industries in which they work are unregulated, meaning tens of millions fall outside of social welfare frameworks.
"This investment comes at a crucial time. The challenges that many Indonesians face in their day-to-day lives have only been exacerbated by the COVID-19 pandemic, including the health crisis it has brought as well as the devastating hit to the economy," said Azam Khan, IFC Country Manager for Indonesia, Malaysia and Timor-Leste.
"IFC is excited to make this investment in PasarPolis, Southeast Asia's largest insurance technology platform, as it gears up to expand its digital distribution channels, making insurance more accessible and affordable, especially for the underserved and those living in remote areas," Mr Khan said. "Moreover, this timely investment aims to support the country's effort to advance the development of digital economy and achieve a greater digital integration within ASEAN."
Since its inception five years ago, PasarPolis has provided insurance protection to as many as 30 million Indonesians – 90 percent of whom are first-time policy holders – through the development of microinsurance products that are affordable and match the needs of the people. About 40 percent of PasarPolis policyholders work in the informal sector, as online motorcycle and taxi drivers, couriers, and as part of the micro, small and medium enterprise sector.
This investment from IFC is also aligned with the Indonesian Government's efforts in developing its digital economy, seen as a key driver of economic growth into the future, as well as a regional plan to broaden digital integration, known as the Master Plan on ASEAN Connectivity 2025.
About IFC
IFC—a member of the World Bank Group—is the largest global development institution focused on the private sector in emerging markets. We work in more than 100 countries, using our capital, expertise, and influence to create markets and opportunities in developing countries. In fiscal year 2020, we invested $22 billion in private companies and financial institutions in developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity. For more information, visit www.ifc.org.
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About PasarPolis
Established in 2015, PasarPolis is Southeast Asia's leading Insurance Technology (insurtech) platform. PasarPolis' mission is to democratize insurance so that it can be accessed more easily, quickly, and on target through innovation and the latest technology. PasarPolis' technology ensures a delightful consumer experience from product selection to claims. Over the past five years, PasarPolis has become one of the insurtech industry's leaders in Southeast Asia with a focus on easily accessible and affordable insurance products. PasarPolis has also invoked national pride after it started operations in Thailand and Vietnam.
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