PolicyPal was never going to make it

Since we published a commentary about insurance brokerage company CXA a few days ago, we have received quite a bit of feedback about the business model, the market, and the founder(s). 

Just this week, AMTD, who is bidding for a digital bank in Singapore, announced their acquisition of controlling stake of PolicyPal, another ‘tech-enabled’ insurance broker. 

This article came from a friend who followed PolicyPal closely between 2016 and 2018. The author requested to remain anonymous. We have edited it slightly. 

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So PolicyPal has finally found an exit. AMTD seems to be the one saving it from the seemingly unavoidable fate of failure. The brokerage licence PolicyPal already owns should be the most valuable asset in this transaction. It takes usually four months for a Singapore-registered company to get a simple brokerage licence. 

You (Momentum Works) has correctly highlighted in the TLD article about CXA (although in an indirect way), the insurance brokerage market in Singapore is competitive. 

PolicyPal, which claimed to have raised $20 million in an ICO, actually had big difficulties generating real business. While its real revenue is similar to that of CXA, PolicyPal has a much more expensive method of customer acquisition – direct. 

This is a channel that insurance companies have been exploring – with at best mixed results. Just look at how many direct insurance ads on taxis and billboards, you get a sense of how expensive it is to acquire a customer. 

With just a few thousand registered customers (according to AppAniie), it is hard to see how the business can generate enough commissions to sustain itself, or grow. And for any company who really raised $20 million from ICO, they should have much more customers than that. 

The value proposition of checking whether you have enough coverage and add the missing pieces is in theory sound, but in practice hard to realise. Educating consumers on insurance is costly and was in the past already done by repeated (and often annoying) visits by agents. 

The real lucrative brokerage business, the corporate and maritime insurance policies, can hardly be replaced by a pure online system. Or, put it in other words, it takes time to make the industry comfortable with doing that online. 

In the meantime, with the shelter of AMTD, maybe the PolicyPal team will finally be able to try something innovative, without the baggage of having to constantly tell the founder inspiration story to get attention.