KUALA LUMPUR, Nov 19 — What happens when you are knocked off your perch after sitting pretty as a leader in the motorcycle insurance segment for years? 

Do you get into a price war with your competitors who have been slashing prices just to gain market share? Or do you completely change the motor insurance landscape by launching something new?

Pacific & Orient Insurance Co Bhd (POI) decided to do the latter.

They did not exit the motorcycle insurance segment but instead launched PrOmilej, a car insurance that allows policyholders to choose their premium according to their car’s annual mileage in April.

As Noor Muzir Mohamed Kassim, CEO of POI, puts it "they took our lunch, so we are taking theirs” referring to the other insurance companies whose main focus has been car insurance.

The premise for PrOmilej is pretty simple (so much so you wonder why nobody came up with it earlier): People who drive their cars less should not be charged the same premium as those who drive more.

If you drive less than 5,000 kilometres a year, you can save up to 40 per cent on your basic premium, 20 per cent if you drive between 5,001 and 10,000 kilometres and 10 per cent for 10,001 and 15,000 kilometres. 

This is on top of the normal NCD (no claims discount) given depending on your status.

Even better, you enjoy the savings up front... not a year later as with most other insurance products.

Apart from offering consumers a unique product, POI is also disrupting the industry by making this a direct-to-consumer product. In other words, consumers buy PrOmilej directly through POI’s website or app... not through agents.

We shop, pay bills, order groceries, and even have meetings online now so why not buy car insurance, right?

Muzir explained that this is nothing new in Western countries like the UK and even India where online channel penetration for auto policies in 2019 was 68 per cent and 46 per cent respectively.

In South-east Asia, however, this has not happened yet and this is where POI saw an opportunity.

When POI was brainstorming how to regain market share in the motorcycle insurance segment, the company came up with a digital strategy that did not include motorcycle insurance!

"We did not want to alienate our existing bike agents... as a direct-to-consumer route would cannibalise their business,” explained Muzir. And as their car insurance segment is small, they launched PrOmilej as a direct-to-customer product.

"We explained to our car insurance agents that this was something we had to do.”

According to statistics, there are some 10 million cars registered in Malaysia. POI estimates that at least 30 to 40 per cent of these are the second or third cars in families used mostly for household purposes.

And with the Covid-19 pandemic disrupting work routines and movement, cars are really being driven much less than before.

The owners of these cars will definitely benefit from PrOmilej and so far response has been good; in July, just three months after it was launched, PrOmilej has already outstripped the direct volume of normal private car insurance.

But wait... won’t the competition try to replicate this product as well? Muzir is confident they have a pretty good head-start and advantage over the other insurance companies.

He thinks they will be wary of alienating their large network of agents if they go the direct-to-consumers route. This is a case where being an industry leader — in this case car insurance — is not advantageous.

Right now, POI is focusing on this digital policy for all its upcoming products including general insurance. When next we are all able to travel, we can buy travel insurance on POI’s website or app.

Muzir says mass customisation is the way forward and is proud that POI has come up with an innovative product to disrupt the existing market and to begin to change consumer behaviour.