Chinese giants like Alibaba and Tencent have created colossal empires by raising the ecosystem’s concept to maximum power. A recipe that unites millions of customers, many technology, and interconnected companies, one is taking advantage of the synergies generated by the other – which makes business gain body quickly. It is, in a way, this model that has accelerated the growth of Santander Auto, the insurtech of Santander and HDI Seguros – a robust ecosystem formed by the 15,000 stores and dealerships that offer vehicle financing from the Spanish bank and the strength of the website Webmotors, a car sales giant with 30 million visits per month.
The digital insurance company, which has just completed one year of life, reached 30 thousand active contracts and R $ 50 million in premiums. Now, it is preparing to strengthen its business and its ecosystem further. “We are about to launch a product for trucks that run in cities, and we will partner with the Hyundai bank,” says Denis Ferro, CEO of Santander Auto.
The new product comes in addition to a range that has been added in recent months. After traditional cars, it has evolved into armored, hybrid cars that use gas kits for application drivers and, more recently, for motorcycles. But what explains the growth of the base, in addition to the ecosystem, is its business model.
Santander, owner of a loan portfolio of R $ 51.9 billion in autos, finances about 75 thousand vehicles per month – which guarantees a 26% market share. Insurtech, led by Ferro, hitchhikes at the time of financing, embedding insurance for the customer with just one click.
It may seem simple, but to achieve this model, the insurance company had to be created from scratch, without the vices of a large company, with the autonomy and agility of a startup, competing with the bank’s own insurance company whose products are sold at agencies. “It was the only way to make the process less bureaucratic,” says Ferro.
The executive repeats the figures that hammered in his head when he joined the Santander Auto creation project. “Three and one,” he says. And keeps going. “In-car financing, Santander had developed a system in which the CPF, cell phone number, and date of birth were enough to approve it. It was three pieces of information and a click”, he says.
But the same was not the case with taking out insurance. “Then, there was the bureaucracy. I needed more than 35 pieces of information to hire,” he says. The company, the result of a joint venture between the Spanish bank and HDI Seguros, developed algorithms, and took advantage of the financing data to simplify the process.
“When the customer finances the vehicle in a store or dealership with Santander, we don’t need to ask any more questions,” says Ferro. The bank scans various credit bureau services and other databases. “I don’t know if the customer lives in a gate or not. But I have other information that makes more sense, such as how many cars the customer has had, how many times he has changed cars.”
The exchange of information and the ecosystem’s strength is perceived in the interaction with the Webmotors website, which also belongs to the Santander group. If a customer crashes the car and has a total loss, the insurance company usually delivers the claim money.
“In our case, together with Webmotors, we use algorithms and cross-check the pre-approved credit from the customer’s financial and history. We contacted him and told him to buy a new car by paying the installment he paid per month. The store salesperson even receives the lead to call the customer,” says Ferro.
The digital model and the experiences created by the bank’s “startup” were based on the success stories of the European and American markets. One of the inspirations was the popular Lemonade, an insurtech that uses many data, artificial intelligence and is characterized by the ease and agility in contracting insurance.
The company, which has a base of young customers who had never taken out insurance in their lives, went public in early July in New York, worth $ 1.6 billion. Tuesday, August 18, just over a month after the IPO, it already had a market value of $ 3.49 billion.
Sea of opportunities
If fintech is already a reality worldwide, insurtechs are still in their infancy, at least here in Brazil. “The insurance market is now starting a process that started back in the banking sector,” says Francisco Guedes, director of technology and innovation at Ô Insurance Group, an open insurance hub.
Guedes, who also coordinates the company’s Lab aimed at startups in the insurance market, says the trend is that, in four years, the sector will be more mature from a technological point of view. Bodies such as the Superintendency of Private Insurance (SUSEP) are beginning to become more flexible. “In the past, here in Brazil, there was no talk of car insurance by mileage. Today that is changing,” he says.
According to data from the National Confederation of Insurance Companies (CNSEG), Brazil’s insurance market, excluding health and DPVAT, raised R $ 270 billion in 2019, an increase of 12.1% compared to 2018. And there is an avenue to be explored. A study developed by the District, an innovation ecosystem open to startups, shows that 85% of Brazilian homes are uninsured, and 70% of the vehicle fleet is not insured.
Brazil is in the 50th position when it comes to insurance per capita spending. Keeping an eye on this, seeking to create new products, and using many technology, more and more insurtechs are emerging. This same study by Distrito shows that at the end of 2019, 113 startups targeted this market in Brazil, a 47% growth compared to 2018.
They range from small companies that still need capital to scale their operations to companies leading the transformation process such as Youse, Caixa Seguradora’s online insurance sales platform, Ô Insurance itself, Thinking, among others. Santander Auto is also running to become a reference in this segment.