Guess the folks at NTUC Income didn't hit their Q4 sales targets, because they're now pushing this new insurance concept that supposedly protects you against Grab, Gojek and Ryde surge pricing. It's called Droplet.
I'll let that sink in for a minute.
Now, you're either going "WTF", or you're praising the NTUC execs for this godsend (because you yourself have experienced numerous times the financial disaster that is surge pricing), right?
Whichever it is, you probably want to find out more. So I'm going to take you through how it works, and talk about what's good, what's bad and what's plain stupid about Droplet.
How does Droplet NTUC insurance work?
You buy coverage only for specific dates within a 1-month window. Pricing varies, but based on current rates, the premium ranges from $1.60 to $3 per day.
You need the following to buy Droplet:
- Valid NRIC/FIN
- Grab account with email address
- Mobile number linked to PayNow
On the dates that you're covered, if there's surge pricing due to rain, you can claim up to 60 per cent of your Grab/Ryde/Gojek trip fare or cancellation fee.
Their claims process is very simple. All you need to do is forward your Grab e-receipt to firstname.lastname@example.org.
NTUC Income will verify if it was indeed raining at the time and location stated in there. If it was raining, then they'll process your claim and refund you by PayNow within 3 days.
You can submit as many receipts as you want in a day, but the payout is capped at $50 per day. Also, Droplet obviously will not cover surge pricing due to reasons other than rain.
How much does it cost to insure Grab, Gojek & Ryde rides?
As I mentioned, you can buy Droplet coverage up to a month in advance. There's a handy NEA weather forecast for the next 8 days on the website.
This seems to affect the price of the insurance premiums, although how it affects price is not straightforward. Here's a snapshot of the premiums:
Everything from Sun 3 Feb onwards is what appears to be their "standard price", $3 per day. That's regardless of whether it's a weekend or weekday or a public holiday like Chinese New Year.
While updating this article, I noticed that premiums have fallen quite a bit in the 3 months since Droplet was launched. The rate was $2.25 to $4.85 per day when it launched in October. NTUC also now allows you to buy single-day insurance, whereas you were forced to buy at least 2 days' coverage previously.
So is this new NTUC insurance Droplet worth the money?
Okay, I admit that I was totally ready to bash Droplet as another strawberry generation product for weak people who are over-reliant on ride-hailing apps.
But after considering the costs and benefits of Droplet, I think that it might be worthwhile in some situations.
Okay, first of all, let's establish that surge pricing can be a real pain in the a**. It's hard to find actual stats online, but just anecdotally, we've heard of Grab trips that normally cost $20, suddenly surging to $40 or as much as $50 on rainy days. I also just tried booking a Gojek yesterday after a brief rain shower, and was quoted $23.50 due to surge. I took an $11 taxi ride instead.
So let's say you pay $3 for a days' coverage and you get hit with a $50 fare instead of the usual $20. You can claim 60 per cent of the fare, or $30. That brings your total costs to $20 (fare) + $3 (insurance) = $23, which is much more palatable.
Given the relatively low premiums, Droplet does appear to be a worthwhile hedge against risk for very important dates. Think weddings, parties, corporate events, and especially travel dates. It's a real bonus that there's no "festive surcharge" for key Grabbing dates like Chinese New Year and Valentine's Day.
Since February is already such a wallet-drainer for many Singaporeans, I'm all for a product that helps manage your cash flow.
What I wouldn't want is for Singaporeans to get overly reliant on insurance to cover surge pricing. Because I think there are sinister consequences.
Oh no, you're going to go all Black Mirror again…
Yes. Here I go again, striking fear into the hearts of innocent people who just want to save money on Grab rides.
My main concern is this: if surge pricing is insured, Grab and Gojek might never have incentive to reduce their prices.
Right now, surge pricing is about the only thing that makes us turn towards taxi companies and competitor ride-hailing apps. For example, a recent Coconuts post compares a Grab ride costing $41 due to surge pricing vs just $13 on their competitor, Ryde.
But if you can claim for surge pricing, you won't be deterred from using your default ride-hailing app no matter how much they jack up their prices. And that means they can continue to overcharge without hurting their customer base.
I'm not making this shit up, because this is actually what happened over the past couple of years with health insurance.
What happened was that loads of Singaporeans went and bought full riders with their health insurance, which allowed them to claim insurance for 100 per cent of their medical bills.
Guess what happened? Everyone started going to private clinics and hospitals at the drop of a hat because you didn't have to pay. The worst thing was that the private clinics themselves kept jacking up their prices to staggering amounts, because patients didn't feel the pinch.
In the case of health insurance, the Ministry of Health actually jumped in and outlawed full riders in the hopes of dampening Singaporeans' enthusiasm for insurance claims. In the case of ride-hailing apps, I'm not so sure if the government would step in.
So, yup! Despite making Grab and Gojek look like the bad guys, this insurance arrangement actually benefits them, at least in the short term.
Aside: A bit of Googling also reveals that Grab is a partner with NTUC (both Income and FairPrice). Can't say I'm surprised.
This article was first published in MoneySmart.