Groupon founder enters insurance

Founder of discount voucher business Groupon SA Daniel Guasco is planning to shake up the insurance space after securing funding from a US hedge fund.

Founder of discount voucher business Groupon SA Daniel Guasco is planning to shake up the insurance space after securing funding from a listed US hedge fund.

The Silicon Cape chairman, who founded e-commerce site Twangoo in 2010 and later sold it to Groupon, has started an insurance-selling platform and is challenging insurers to stop paper-based processes and do things digitally because of changing consumer behaviour.

He was speaking at the Financial Indaba on Thursday.

His insurance platform, Click2Sure, has registered several retailers and telecoms companies who want to sell insurance to their customers, providing them with a platform to offer insurance. When customers buy big-ticket items, they are given the option to add insurance.

Among the big companies offering insurance through Click2Sure platform are Takealot, weFix and Uber. But Guasco said his company is also talking to the big insurers to bring them onto the platform.

“When you are dealing with mass retailers like TFG,

Vodacom or even Capitec, they don’t want to sell your product, they want to sell their own or that of big insurers. In that instance, we are the whitelabel partner. We provide an insurance platform that enables their offering to be digital,” said Guasco.

The platform also sells its own short-term and long-term insurance, underwritten by Guardrisk Insurance. It has more than 40,000 customers.

“The way we do insurance doesn’t make sense. Why are will still using brokers and call centres? Why don’t we empower the customer? There are people in the industry who have tried to do it, but they are actually not doing it. Coupled with the legacy issues of selling through brokers, technology is not yet playing the role it can,” Guasco said. Insurance in SA is predominantly sold through brokers or insurance call centres, even if customers enquire online. Selling insurance on digital platforms has not been very successful, as a study by PwC last year showed. While more people were comparing and buying insurance products online, the conversion rate was low.

This means more people were failing to complete their purchases and a broker or call centre agents were needed to follow up for a sale.

Guasco said while this was a challenge, the company was seeing a change in consumer behaviour.

“Eight years ago, when we started our e-commerce site, people would buy online and then come to physically collect their goods because they hadn’t done it before.

“They didn’t trust it. Eight years ago, e-commerce was less than 1% of the market. We were ahead of the curve. We are on the curve again,” he said.