The rise of ‘digital-first’ business models has led to the rapid growth of insurtechs, which is largely changing the global insurance landscape. Driven by digitization, ground-breaking technologies, automation, fierce market competition, and dynamic customer needs, insurers today have greater access to more and better data than ever before. The proliferation of insurtechs has enabled insurers to interpret this data in a way that can fundamentally revolutionize the industry.
Despite insurtech growing at breakneck speeds, the industry still has a long way to go as it has to tackle several challenges - inherent misalignment of interests between companies and policyholders, lack of trust amongst consumers, a substantial gap between the consumers’ expectations and the insurer’s digital capabilities, complex claims processes, as well as high premiums and costs. If insurtechs are to disrupt the insurance industry and truly achieve business excellence, then it is imperative that they create a fully digital, trustworthy, and seamless experience for consumers.
Unveiling a Complete Revolution in the Insurance Experience
Enter Kakau, a technology company that offers the most practical, secure, and independent insurance solutions in the market. Established in 2016, Kakau is a Brazilian startup headquartered in São Paulo. Powered by Artificial Intelligence (AI), Machine Learning (ML), and Big Data, the firm serves as an alternative on-demand insurance platform that helps consumers cover their risks in a wholly digital, seamless fashion.
The goal of the company is to deliver more accurate results and make insurance a financial and social inclusion tool. It is no surprise that insurance has lagged in terms of technological developments and innovation all these years because a plethora of challenges plague the industry. However, as the first subscription-based insurtech in Latin America, Kakau is not only available in every Brazilian state, it is also working towards addressing current market pain points. The company’s process of innovation and production is relatively simple, transparent, and digital, so to build reliable partnerships with insurers in the market.
Kakau was founded and is led by a team of industry veterans with extensive expertise and skills in the market. The leadership team comprises of:
Henrique Volpi – Volpi comes with more than 20 years of experience in working with various tech enterprises. As the Chief Executive Officer and Co-Founder of Kakau, his role is to focus on the technology aspect of the firm while guiding and mentoring overall operations.
Marcelo Torres – Torres is Kakau’s co-founder that leverages his years of experience in the insurance market to deliver innovative and scalable products. He also supervises the technical and sales roles of the company.
Diogo Russo – Russo works towards building an international brand name and takes charge of all the marketing programs of the firm. He is a co-founder with extensive digital marketing, film, and advertising experience.
“By employing technologies such as AI, ML, and Blockchain, we want to be bold, move fast, and break things,” expresses Volpi. Kakau desires to provide insurance to the uninsured, equipping every individual with transparent and minimal-cost financial protection and savings. Additionally, the firm aims to ensure agility in hiring and loss for policyholders, making the processes more straightforward and swifter. “We want to provide more free time for people to care about what matters. Our purpose is to include insurance in people's daily lives in a simple, transparent and digital way,” adds Torres.
The company also has a very strong commitment to making a social impact. Right from the outset, Kakau has partnered with a Latin American non-governmental organization called Un Techo Para Mi Pais (TETO), that carries out social housing programs, and helps build emergency homes.
Embracing a Safe Future with Path-Breaking Product Offerings
In the first year of its operations, Kakau offered practical residential and smartphone insurance on a subscription basis, keeping in mind speed, safety, and ease in the process. Kakau’s products not only protected homes 24/7 but also ensured an uncomplicated way to protect mobile devices against accidental damage or theft. In the second year of its operations, Kakau increased its coverage to address the micro-mobility segment providing subscription-based insurance to athletes, e-bicycles, and scooters.
“Being recognized as an innovator for the Brazilian market, we are currently signing long-term contracts that guarantee a steady commission flow from carriers,” states Russo. Volpi goes on to say, “We have signed contracts to explore white-label opportunities with Kakau Sonar, an AI-powered underwriting engine. Kakau Sonar utilizes neural networks to price better, increase the addressable market, and prevent fraud.”
The use of AI, coupled with ML and Big Data enables a complete revolution in Kakau’s product user experience. One of the company’s most significant products includes its virtual assistant, Anna, made available at all times of the day. Anna aids in hiring, clearing insurance-related doubts, opening claims, and even requesting for assistance. Thus, Anna not only helps Kakau utilize its resources effectively, but also provides consumers with greater freedom to communicate with the company.
Restoring Consumer Confidence in Insurance
Kakau operates solely on the interest of the policyholders intending to provide an outstanding user experience. Some of the benefits that this digital-insurance platform provides consumers are listed below:
- All products are presented via a digital medium with all the necessary information making it very simple and easy to understand
- The user experience is fully automated and digitized and leveraging advanced digital technologies results in instant customer responses, constant feedback, and seamless claims experience
- Claims processes will be immediate and fair as automatic payments against insurable events can be validated using data given by the policyholder as well as publicly available data, allowing consumers to claim via Kakau’s AI-assistant, Anna
- The digital distribution provides a highly-scalable operating model with reduced overhead, administrative, and sales costs, thereby ensuring lower premiums and higher savings for consumers
- Cognitive computing along with Big Data digitally monitors the consumer’s digital footprint, therefore reducing fraud
- Since Kakau is a digital platform in partnership with incumbents, it will comply with various regulatory governance, making it easier for all stakeholders
Disrupting the Traditional Insurance Landscape and Empowering the Underinsured
Kakau has a unique approach to the insurance business and is highly differentiated in terms of business model, profits, processes, products and services, distribution channels, as well as customer engagement. The firm emphasizes its strengths and opportunities, and its distinct competitive advantages include the following:
Digital Engagement Experience – The enterprise’s business model focuses on bridging the gap between traditional insurance companies and the expectations of consumers today. Kakau empowers users by giving them the ability to acquire products via apps or the web and process insurance faster as opposed to the obsolete bureaucratic system. Going digital will provide very valuable consumer insights from the network’s digital footprint.
Innovative Solutions – A seamless insurance model is relatively new and very few players in the market are currently operating in stealth mode and developing proofs-of-concept. “The successful execution of our first product is expected to attract attention from users and media to try this new concept. By focusing on specifics technologies such as open APIs and Machine Learning, we have been able to enhance the end-user experience significantly,” enunciates Volpi.
Lower Product Price and Operational Costs – Obtaining products online tend to be much lower when compared with traditional incumbents, and since the platform is fully automated, it ensures lower operational cost while being entirely scalable for future growth.
Acquire New and Unhappy Consumers – Given that insurance has one of the lowest Net Promoter Scores (NPS) of any industry, customers are often unhappy with the current experience and would quickly move to a more robust digital platform. Kakau taps into these unhappy consumers and reaches out to newer ones by offering insurance to lower-income people in Brazil. The firm has been able to achieve that by approving a particular project with the local regulator and by using advanced technologies to manage processes. Torres discloses, “as per today, 92% of Kakau’s users never had insurance before joining the Kakau community platform.”
Monetize with Big Data and Segmented Publicity – “As the platform of choice for fulfilling one’s insurance needs, we are going to be able to monitor critical data and digital footprint from users and partners. Monetization will come from precise and segmented marketing, as well as industry-specific research,” affirms Russo.
Although Kakau is part of a competitive industry primarily dominated by mature companies, it still has the benefit of being nimble. By leveraging the ground-breaking technologies that have emerged from the fintech revolution, Kakau hopes to develop a new business model that will fundamentally disrupt the insurance sector.
Tapping into New Business Opportunities
Kakau’s long-term vision is to enable people to protect each other while efficiently spreading risk. “We want to fundamentally disrupt the traditional insurance industry by reducing unnecessary intermediation and empowering the underinsured using a simple digital and online risk-centric platform,” says Torres. To ensure Kakau’s future business success, it is essential that the firm acquires and retains users as advocates of its offerings. “Marketing is going to be designed for users and driven by them. Kakau will motivate and reward users for improving and referencing the collective experience via indirect and direct channels,” reveals Russo.
Kakau will also benefit from employing new technologies to deliver Software-as-a-Service (SaaS) and its platform using the cloud. This will enable the company to have a lower Total Cost of Ownership (TCO), scale effortlessly, and launch innovative products rapidly. Kakau also aims to deliver a unique customer experience by using Big Data analytics to anticipate customer behaviors.
Going forward, Kakau is launching micro-mobility insurance with a focus on growth as it is currently observing exponential signed-users traction. Kakau also has plans of holding a license to operate its products. The firm supports SUSEP and hopes to deliver an online lending model which is similar to that of the Brazilian Central Bank. For 2020, Kakau is looking to expand to Europe and is also working on a life-insurance project that will facilitate access to lower-income people. To provide a seamless life-insurance experience, the firm is closely integrating with health providers such as DASA. It has also partnered with Prevent Senior, a health plan focused on providing life-insurance solely to the senior population.
While Kakau is slowly gaining recognition in the international market, there is still a vast untapped opportunity for insurtech in Brazil. “Kakau’s business model is highly scalable and sustainable as new products and partners can be added to our platform at a low marginal cost following the partner carrier desire or recommendation. Therefore, we expect to be profitable in our fourth year. We are also positioning our insurance products as the most economical and easiest option in the market,” concludes Volpi.