[Start人] Recommending Lowest-Priced Insurance Products Under Same Conditions... Changing the Insurance Industry Landscape

Interview with Jeong Yunho, Co-CEO of Habit Factory
"Resolving Information Asymmetry in Finance to Maximize Customer Benefits"
Optimal Insurance Product Recommendations via Insurance App 'Signal Planner'

Expansion into Pension Market Next Week
Providing Mortgage Loan Information for US Corporation

Jung Yunho, Co-CEO of Habit Factory.

[Asia Economy Reporter Donghyun Choi] "Among the numerous insurance products available in the market, the best for customers is the cheapest under the same conditions. Our role is to quickly find this and make the contracting process easy."

Jung Yunho, co-CEO of Habit Factory, whom we met at FastFive Yongsan office, said, "Insurance recommended by commissioned insurance planners affiliated with general insurance agencies (GA) tend to be structurally expensive products." Generally, when customers subscribe to insurance, they receive recommendations suited to their current situation through consultations with planners. Jung claims that the recommended product may favor the planner rather than being the best for the customer. This stems from the structural issue in the insurance industry where planners receive higher incentives for selling high-value insurance.

Founded in 2016, fintech (technology + finance) startup Habit Factory focused on this ‘pain point’ and officially launched the B2C (business-to-consumer) insurance recommendation service ‘Signal Planner’ in September 2020. When customers access the Signal Planner application and input their financial situation, the algorithm recommends the optimal insurance products. It also allows customers to evaluate their existing insurance against current market conditions.

Signal Planner employs 50 planners as well. Face-to-face meetings are mandatory by law when signing insurance contracts. These planners also conduct real-time consultations with customers via KakaoTalk. Unlike typical GAs, all of them are employed full-time. Jung said, "To recommend affordable and good products without relying on incentives, full-time employment was essential," adding, "Since they only focus on finding good products for customers without worrying about sales, their job satisfaction is high."

Jung emphasized ‘minimizing human intervention’ when launching Signal Planner. Typically, when subscribing to insurance through a GA, a single planner spends considerable time from solicitation to product analysis and final contract. Jung said, "We dismantled the existing sales process and built a system where big data and algorithms handle as much as possible," emphasizing, "This improved work efficiency for planners and allowed them to serve more customers, resulting in increased productivity."

From the customer’s perspective, it resolves fatigue from frequent solicitation calls by GA planners and difficulties in understanding coverage items. Customers can check information in real-time through the app and use KakaoTalk for live consultations if they have questions. Since all consultation records are saved as text, customers can review explanations anytime.

Habit Factory, rare among fintech companies, reached the break-even point (BEP) on an accrual basis in March this year. Due to industry characteristics, revenue is shared with Habit Factory when insurance products are sold. Although it varies by insurance contract terms, the final revenue settlement period is about 13 to 18 months. Based on cash holdings, the company is expected to turn profitable soon. Insurance subscriptions through Signal Planner increased from 11 cases in September 2020 to 1,416 cases as of last August. During the same period, the monthly initial insurance premium per consultant rose from 342,000 KRW to 1,416,000 KRW, more than quadrupling. The monthly initial insurance premium refers to the premium paid by new insurance subscribers and is a standard for judging performance in the insurance industry. The conversion rate from app installation to actual insurance contracts also surged from 0.2% at service launch to over 3%.

Habit Factory established a U.S. subsidiary in January and launched the mortgage information service ‘Loaning.ai’ in March, intensifying its global expansion. Jung said, "The U.S. mortgage market is very similar to the tools we have been servicing domestically," adding, "We provide services that allow customers to obtain loans with interest rates suited to their situation and the lowest fees." Loaning.ai has already brokered loans exceeding 10 billion KRW in cumulative value.

Habit Factory secured 10 billion KRW in Series B funding last November. The total accumulated investment is 13.7 billion KRW. Jung is preparing for the next investment round of about 30 billion KRW. They plan to launch pension-related services next week following insurance. Jung stated, "Serving the interests of customers is the company’s core value and goal," and expressed ambition, "We will maximize customer benefits by resolving information asymmetry in various financial sectors such as insurance, loans, and pensions."