OneDegree Group is making a big bet that demand is increasing rapidly across Asia for innovative insurtech products that are sophisticated and affordable.
The insurtech received its virtual insurance licence in 2020 and launched with consumer-focused lines, such as pet insurance and parcel protection. The group remains one of just four virtual insurers licensed in Hong Kong – the other three are Bowtie Life Insurance, Avo Insurance, and ZA Insurance.
The digital insurer has now expanded from its insurance carrier roots and has set up OneDegree Global as a technology subsidiary that provides Software-as-a-Service (SaaS) solutions to insurance and healthcare companies. A case in point is the company’s IXT solution, a platform that enables insurance providers to establish underwriting rules, configure products, and swiftly distribute new products to their customers.
Cyber focus
Another key area of focus for OneDegree is cyber security.
OneDegree Group’s Co-Founder Alex Leung told (Re)in Asia that its SaaS solution, Cymetrics, can help traditional insurers, intermediaries, and a new breed of digital insurers assess cyber risks within organisations.
Alex Leung
Co-Founder at OneDegreeLeung said that while larger, multinational insurers – with vast resources – lead the way forward in developing cyber products, a solution like Cymetrics can help the smaller to medium-sized carriers. “They still need to have this technology to play on the same playing field. Or they will be obsolete very quickly,” said Leung.
The solution offers three levels of assessments, ranging from a simple exposure assessment that can generate a report in 15 minutes, a more detailed and intrusive scan, and a top-level penetration (or pen) test to identify and remedy vulnerabilities.
“What’s so unique about Cymetrics, and what we’re doing here, is that level one, level two, these are automated scans. Other organizations do even level two often, but they rely on manual labour to conduct vulnerability assessments,” Leung said. “Cymetrics, fundamentally, is a technology product.”
Insurers can use Cymetrics to obtain security rating scores for a wide range of clients, from small and medium enterprises (SMEs) to large organizations. Leung said that the integration of Cymetrics in the underwriting process can aid insurers in risk assessment, approval decisions, and ongoing risk management.
A focus on affordability and accessibility
One of the advantages of Cymetrics, is that it is more accessible and affordable than competing solutions thanks to its use of technology. This is particularly important for organisations new to cybersecurity, said Leung.
Most other solutions are priced based on annual subscriptions, which smaller organisations that may be new to cybersecurity may not be able (or willing) to pay for.
“Even if I’m a smaller organization, I care about cybersecurity and want to test it out and figure out what makes sense for me, but I don’t want to pay like US$20,000 a year just to get started in this cybersecurity side,” Leung said.
With Cymetrics, OneDegree has taken a different approach, pricing the solution based on use, which allows for flexibility for new or smaller organisations to purchase assessments as they need them. This approach caters to the growing market for cyber insurance among SMEs in Asia, providing an accessible entry point for smaller companies looking to develop their cybersecurity capabilities.
Cymetrics also uses Open AI to allow users to troubleshoot and provide suggestions on how to remediate issues.
“Clients often might not know how to fix the configuration exactly and they need to do an online search. Open AI makes it easier for clients to identify solutions to any issues from the scans. That’s why we want to leverage the open AI service in such a way that they can interact and facilitate quick responses to searches, rather than a traditional online search perspective,” said Leung.
A clear tech strategy
OneDegree Group recently concluded additional fundraising, expanding a Series B round to raise US$55m. While OneDegree sees an immense opportunity in cyber, its strategic focus is on technology more broadly.
Leung said some of the proceeds of the Series B round “will be used to bridge our technology business”, with a portion of the funds raised used for the digital asset insurance business, which provides “crypto exchanges and custodians with our insurance coverage.”
Just last month, OneDegree announced that Hailstone Labs had invested an undisclosed sum with the primary goal to support the advancement of blockchain technology.
At the time, OneDegree’s CEO, Alvin Kwock said that, unlike traditional insurers, the firm can take on more risks due to their diverse expertise in insurance, blockchain, cybersecurity and Web3 operations.
OneDegree said it is making a “big bet” that it can achieve significant growth by providing coverage to crypto exchanges and custodians.
More opportunities for growth
Part of the proceeds from the Series B fundraising will also be allocated to develop the pet insurance business, health insurance and home insurance products. Leung said these are stable lines of business which the group is “looking to grow in triple digits.”
OneDegree is also exploring opportunities for regional expansion. When the insurtech launched its first product in April 2020, its initial focus was Taiwan and Hong Kong. The company is now looking to tap other markets, including Southeast Asia. It already has accounts in Thailand, Malaysia and Cambodia and Leung told (Re)in Asia that the company is looking to “push that expansion a little bit further and broader.”
He added, “In Korea, from a technology business perspective, we have a physical presence. We have a business development partnership in Korea, but it is relatively new. We only onboarded the team in June,” said Leung.
OneDegree has also been looking at Japan and evaluating the opportunity since the end of last year. “We are actually in the process of considering setting up a branch company in Japan,” said Leung. “We see (Japan) as a viable market, especially for the security side. But the key to crack that market open is about the distribution partner, so we are constantly trying to figure out the right partner.”
The company has previously said it has identified a clear path to achieve profitability by the end of 2024.
Asia closing the technology gap
Leung is also optimistic about the insurtech sector In Asia. He said the sector has seen significant advancements in recent years and has started narrowing a gap in capabilities with more developed markets.
“In the insurance industry, I will say five years ago there was a very big gap. But in general, there is now a lot of capabilities within Asia and we could be even more advanced than the US and Europe,” Leung said.
“There’s a lot of pickup and acceleration, with players like ourselves, as well as other start-ups,” Leung said. “Tech start-ups have been bubbling up in both Hong Kong and Singapore, in particular.”
Leung said most of companies in Hong Kong here have been testing and piloting new ways of doing business and new business models, “Some of which are interesting lessons for our counterparts in the US and European markets as well.”
