Especially for Calmins.com and in response to numerous questions from our readers about the Russian Insurtech Project Mango (IC “MANGO LLC”)
Our expert: Viktor Lavrenko – 20 years ago was Vice President Mail.ru. He was personally engaged in sales at times when the whole monthly revenue of Mail.Ru was $ 40,000. In early 2010, the entrepreneur left Russia for Vietnam where he created a popular local browser and a COC search engine and attracted $ 30 million investments in Russia.
In Russia, Victor founded his own insurance company Mango, which was financed by investors for more than 1.5 billion rubles.
At the beginning, we would like to thank you for your cooperation. Earlier in our articles and reviews, we have already considered your insurance products and your project: how to calculate the cost of an apartment in Mango Insurance, the Russian insurance market and Insurtech.
And so, our readers are already a bit familiar with your company and its product line.Pi Now we would like to talk more about the project itself, its people, your vision of the market, and consider trends and challenges in the insurance market 2021.
Our first question is right about …
– As we understand, the concept of the insurance company was founded on the Lemonade Insurance model. Can you comment on why this company was chosen as an example?
– Our concept is that we create a modern technological insurance company for good, and the mission is to help customers who have fallen into trouble. We saw that foreign insurance, in particular Lemonade, can pay customers quickly, simple and a lot. This is the main model, and the business line itself (Lemonade – apartments) is not so important.
I was struck by the potential of the business: at that time the amount of the insurance market in the United States was $ 1.5 trillion, it accounted for almost 10% of the American economy, and in Russia – only $ 20 billion, and this is less than 1.5% of the economy.
– Victor, please tell us how it all started, and how much time passed from the very idea before implementing as a whole project?
– In the summer of 2018, I arrived from Vietnam to Moscow for the World Cup. After this trip, I again thought about returning to my hometown. By that time, COC was published and was stable, so that in this sense did not lose anything. Consequently, I wanted to launch a new project.
Just then, the shareholders of Alpha Groups were looking for a person who was not related to the insurance market, who would create a technological insurance product that mets the demands of modern Russians. They needed a person who would build a completely new business model based on the understanding that new generations trust social networks more than banks.
I was struck by the potential of the business: at that time, the amount of the insurance market in the United States was $ 1.5 trillion, it accounted for almost 10% of the American economy, and in Russia – only $ 20 billion, and this is less than 1.5% of the economy.
Money for the first steps – 500 million rubles – the shareholders of Alpha Group provided this in the autumn of 2018. This money was laid out as the minimum share capital of the insurer- 300 million rubles, staff members and market research.
– So you have no experience in cooperation with insurance companies?
– Is that personal experience. Somehow I wrecked a new car. I got compensation for insurance at about 70% of its cost. The car was bought on credit, so payments were hardly enough to pay off the balance of payment. And even the receipt of this amount took me several months, during which I passed all 9 circles of bureaucracy.
After that, I met with an acquaintance who had a similar case in Italy. There she wrecked a new car and received 107% of its cost. I was very surprised when I heard this story. She explained to me that in Italy, the insurance should make it so that the car was like new, respectively, it is necessary to pay the full cost of the car.
Her car had been removed from production, and a similar new model cost more – and the insurance paid her as much as the new model was worth. Then I thought: “If in Italy they can pay so, then why not in Russia?”
– What is the insurance company Mango now?
– One of the first to join the team was Pavel Konev, who previously worked for the insurance company “Alliance Russia”. He became the general director of Mango. Both Technical Director – Tamara Zuykova, before that he gave the technological projects in Alpha Bank. Together with them, we practically got our team from scratch.
Now we are just over 50 people – this is a 4 end-to-end team, each of which is working on their own direction (apartments, pets, referrers and content). Each team has all the necessary competencies, including the head. Thus, they can establish internal processes practically autonomously.
Before the New Year, we opened quite a lot of new positions: We are looking for IT professionals, an interface designer, marketers that together will help to make a new comfortable and smart insurance product.
– What are the results for Mango for 2019 and 2020?
– The number of customers have greatly grown since 2019: in December last year there were 164 clients, and in early October 2020, more than 6 thousand. At the same time, the accrued premium for 2019 amounted to 453, 000 rubles, and in 10 months 2020 – 21.5 million rubles.
According to the results for the first quarter of 2020, according to the reporting of the Central Bank for insurance payments, we have been the most generous among competitors, paying 85% of the total amount of all insurance premiums.
“Just a streaming service, such as Netflix, has accustomed us to life by subscription.”
– As we believe, you chose in your company a very progressive model of working with customers – by subscription. It is known that per month the client is ready to pay no more than Netflix – about 10 dollars. We also wrote about this earlier in our article. But for understanding, we would like to ask a question: what is the result better, subscription or installment for the insurer and for the client?
– First of all, the subscription model is most clear and is familiar with the modern generation. Just a streaming service, such as Netflix, has accustomed us to life by subscription. Today we not only buy movies and music monthly, but also by the same principle we order products, we organise cleaning, etc. Since “mango” is focused on the most comfortable and understandable service, of course, we consider this model the most successful.
In addition, subscriptions are convenient as a person can abandon the product at any time. With installments, you somehow subscribe to some long history, in three months, and even for several years. With insurance, this is especially important because we can add loyalty to the product and remove the fear of people that the term of insurance is difficult and long. In fact, it is also simple and understandable as how to buy a subscription to Netflix.
– And how much does the client pay a subscription for months, if it is, of course, not a commercial secret?
– For the insurance of property, for example, an outflow from the base for a year is no more than 20%
– It is really a good result, especially for a young company. In one of the interviews, you said that your loss settlement principle is speed and based on complete trust in customers. But the existing practice shows that a fairly high percentage of the market payments in the market are concerned with fraudulent actions. As an example, in the auto business, according to different estimates, this factor can be 20-25% of all payments.
“We also meet with fraudsters, but we have no illusions that it is possible to get rid of them forever.” Some percentage of costs will always have such cases.
We work on the principles of banks and do not sell insurance to everyone the same. We always conduct elemental scoring, which will gradually improve.
In addition, to confirm the legitimacy of the insured event, the support service requests photos and video from the scene. Our employees, as teachers who immediately notice copied work – spot fraudulent schemes very easily.
But if we have doubts that require a long test, we first carry out payment (usually we do it very quickly, our record is 45 minutes after processing), and only then do we check up on the client. If our suspicions are justified, some we forgive, and some we will definitely recoup over paid money.
– Such an approach to losses is very custom-oriented. And why did you decide to start insurance of apartments from the product, and not with a more sought-after view, for example, DMS?
– When we started the business, we thought: and where can we pay so much that it is more noticeable than what competitors pay?
And so we came to the insurance of apartments. The fact is that the average level of property insurance in Russia is now 15% of the fees. It is catastrophically little. In Europe, many insurance companies have a policy not to do business, where the level of payments is less than 65%, and in the US, the target level of payments from insurance companies is 70-80% of the fees depending on the business line.
The fact is that for a new company it is important to be an innovator – those who come to the market and offer something essentially much better than competitors.
“We first process the payment (usually do it very quickly, our record is 45 minutes after the request)”
– We know that now your product line is represented by insurance of apartments and pets. Does the company have plans to expand their product line?
– First of all, we are now aimed at conducting tests of technologies that we want to bring to the market. It is in our plans to introduce a variety of technologies from Pay As You Go to blockchain. Tests are needed to understand what we will stop.
In addition, we are going to expand our product line and go to new business lines, such as accident insurance. However, new products are not an end in itself for us, but only a way to test new technologies.
– In the spring of the company, the insurance program for coronavirus was launched. Why did you have to give up this product that is now?
– Unfortunately, such insurance began to be sold not only by us, but also other insurance companies. Accordingly, such insurances immediately received a reputation as fraudulent schemes, and not without reason. Some insurance policies in one paragraph contained phrases like “COVID-2019 enters the list of virus diseases covered, with the exception of a pandemic.” As a result, they strongly spoiled the reputation of this product, and we were not attempting to “wash off” the reputation of meaning.
– In his interview, you said that the company is focused on the younger generation. Our reader tried to insure a camera, but only a savings in the fact of such insurance, the same situation on bicycles and scooters is involved – do you plan to take this market share in the future?
– Yes, we plan to make insurance of technological devices. Perhaps next year.
– How do you think such a product should look like?
– So that customers can simply, quickly and make a lot of payments and / or service, obviously. Details, how it will work with us, we will not disclose: it is better to tell when there is a ready-made product.
– You are positioning yourself as an innovative company in terms of customer focus – fast payments. Can you talk about the process of payments and if it depends on the amount of payment?
– The process does not depend on the amount of the payments: it is generally usually enough to send photos and video from the scene of events. In the case of significant damage, the process is usually even easier. So, for example, our client’s apartment caught on fire. There, we didn’t need any particular confirmations, since it was a well-known story that the media covered. We didn’t need to consider anything and it was not necessary to prove – everything is so clear, so we paid the maximum possible payment without any torment for the client. From the moment of fire until the receipt of the client less than a day passed.
– You also mentioned that the company’s goal is to pay 80% of GWP (not now, and in Maturity Model), as far as possible with your model with only one sales channel through your site, and the question – whether they will expand
– We have different goals on different business lines. We have a very simple logic: if it is possible, for Western insurance companies, then why is it impossible for Russian ones? Of course, it is possible, and of course we will expand in all possible directions.
– But after all, the cost of direct Internet sales channel may even block the content of the network of insurance agents? And if we talk about the model Lemonade – in 2020, it showed a loss of more than 12 billion dollars?
– Of course – a customer-oriented business cannot be profitable from the day one. Recently, Ozon reached the stock exchange, the company is more than 20 years old, and it is still unprofitable, but it is estimated to be worth 7 billion dollars. It requires years until Mango will be in profit.
– What do you think you need to appeal to generation Z – “generation of one button”?
– The answer is in your own question: the new generation needs it to be simple, quick and much like Mango.
“A customer-oriented business cannot be profitable from the first day … years will are needed until Mango will be in profit”
– Is blockchain technology, in your opinion, the future for the insurance industry in Russia, and does your company plan to adopt this technology?
– Technological progress does not stop, so electronic money, the emission of which is carried out by non-banking private and non-commercial organizations, will definitely become the norm. Cryptocurrencies will develop and move towards supporting social functions – somehow you need to pay salaries to doctors and teachers and this means that taxes will be too. In my opinion, this transformation could take 10-20 years, for which the awareness should penetrate into the minds of taxpayers. I think, the main driver here will be political change – the population should want to pay taxes, and blockchain can only help ensure the transparency of taxpayers’ expenditure.
In the insurance, blockchain will penetrate together with changes in the financial system throughout the world. With recent economic events, such as negative oil prices, for example, they say that they are not far off.
– In our reviews, we often write great examples of Inshurta startups in the world, and first of all in the United States. What do you think also interferes in the Russian market: regulatory barriers, market immaturity, technology, or something else?
– All that you have listed. The insurance market in Russia was created in essence as some kind of scam: for example, insurance helped companies avoid taxes when paying salary to employees through “Logging Insurance”. Then they had to replace them in essence, the fictitious housing insurance occurs when the mortgage was made, which hid an extra percentage of payment. And then on the rolled insurance market, everything was just more unfavorable for people.
Add to this model the work of companies that give agents 80% (!) of the insurance premium, and then do everything so as not to pay to customers.
So, we got an obvious attitude to the insurance market, which you will not change in one day. Here you need to work hard and create new schemes that will pay out to customers and step by step to develop a better reputation.
– Well, in conclusion of our interview, we would like to know your plans for the future and the vision of your company in 3-5 years?
– Our company will have millions of customers who, whatever happens to, we will pay even easier, faster and more.
We thank Victor and his team for cooperation and wish the company’s success in achieving such ambitious goals in the highly competitive Russian market.
© Correspondent L.S.