Mosaic
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Mosaic Mosaic takes advantage of a major opportunity in the NZ insurance market with a revolutionary platform and product
  • NZ$105,078

    invested

  • 105.1% funded

  • 0

    time left

  • 2.4% - 13.1%

    min - max equity offered

  • NZ$100,000.00 - NZ$600,000.00

    min - max investment sought

  • NZ$493.00

    min investment parcel

OFFER IS CLOSED
International License

Well done on the first license deal, in the update you mention that the terms are confidential, but say that the upfront license fee is for more than the equity crowd funding raise. Can you advise is that more than the $100k minimum, or $600k maximum as that is quite material. If more than $600k why not just use those funds and cancel the crowdfunding offer?

Ralph Shale posted on 09.11.2015

Hi Ralph, great questions. The immediate payments are close to the minimum $400k we were looking raise so we've adjusted the range. The deal does represent more than this and the benefits will flow once we deliver the platform and the products to Australia. Great news for current and new investors.

Andy Baird posted on 09.11.2015

Replied to Ralph Shale

Various Questions

Andy

I had a quick look at your website. I have to say what an easy process and wish that it was that simple when I purchased my insurance policies. Questions I have regarding to this offer are as follows:

(a) What exit value range are you aiming for and the timeframe you are aiming for?
(b) How long have you launched the website? Can you tell us a bit more about the statistics on (1) the number of site visits since launch (2) conversion rate - i.e. % of visitors to website that lead to signing up a policy?

Julian So posted on 08.10.2015

Hi Julian, thanks for the feedback on the website and some good questions. (a) The exit timeframe is 2 to 3 years, we can't discuss exit price but obviously we intend a price you'd expect for the timeframe and risk of the investment. (b) The website launched in late August, we're receiving traffic both from the media coverage we've been getting and our Facebook campaigns which we started recently. (1) In the past 3 weeks we've had 739 sessions on the site. (2) the conversions currently are in our launch range for conversions of 1 - 5%, we have medium and long term plans to improve these conversions but it's a good start. Thanks for your questions and I hope we can welcome you on board as an investor.

Andy Baird posted on 08.10.2015

Replied to Julian So

Under 35s only

Are you only targeting under 35's? why?

I would have though the 35-45yo market were also tech savvy, have higher incomes and greater insurance needs (more likely to have families) and the risks aren't significantly more that your online tool wouldn't be appropriate.

Craig Jakich posted on 30.09.2015

Hi CJ, great question. We have a 35+ product in the pipeline for 2016 which is mentioned in the IM and under Product Strategy in the Project Overview. We have also had questions on the Volo Facebook page asking about 35+ products for continuity so there is market interest for these products as well. So you're right there is definitely an opportunity for 35-45's and it is in the plan.

Andy Baird posted on 30.09.2015

Replied to Craig Jakich

Why has the Public Date changed

The public date for the deal has changed to September 28th? Why the change?

Lachlan Stuart posted on 24.09.2015

Volo is excited to announce that due to many private investor enquiries the Public Launch is now 9am on Monday the 28th of September.

Demand and requests for the offer to be made public have been strong but at Volo we are committed to ensuring those who have requested private access to have time to complete their due diligence. We're looking forward to allowing the public a chance to share in our success!

Andy Baird posted on 24.09.2015

Replied to Lachlan Stuart

  • > Offer Type: Australian Retail (CSF) Offer This offer is open to Retail and Wholesale/Sophisticated investors in Australia. Whilst in New Zealand the offer is open to Wholesale investors.
  • > Company: Mosaic Enterprises Limited Securities purchased are for direct equity in Mosaic Enterprises Limited.
  • > Security Type: Ordinary Shares
  • > Fees Paid by Issuer: Undisclosed The fees paid to Equitise by the issuer upon successfully completing the funding round is undisclosed.
  • > Cooling-Off Rights: 5 working days - Retail investors in Australia are able to withdraw their applications for securities with accordance to the Australian Crowd Source Funding (CSF) regulations. For more information please click on the link supplied.
    More Info
  • > Related Parties: None
Note!

Mosaic is pleased to announce our first international licence has been signed. The immediate payments are close to the minimum $400k we were looking to raise so we have reduced the minimum and maximum amounts of the offer. Specifics of the contract are confidential but it does provide immediate and long term cash flow. Full details in the attached press release.

More detailed information about this offer is contained in this Offer Document

Offer Document
Offer overview

The pre-money valuation of $3,987,500 million has been determined for this offer. This figure is supported by a valuation report created from the financial model prepared by Clare Capital Ltd and our insurer partner analysis of company value. The directors have also reviewed the valuation and believe it is fair to both the existing shareholders and potential investors who are considering investing in this offer.

An overview of the offer is displayed below:

Pre-money valuation: $3,987,500.

Target investment amount: $400,000 (minimum proceeds for offer success).

Maximum investment amount: $1,000,000 (maximum proceeds to be raised in this offer).       

Post-money valuation: $4,387,500 (assuming minimum proceeds are raised).

Minimum equity offered: 689,655 new shares, representing up to 9.1% of Mosaic Enterprises Limited at the conclusion of the offer.

Maximum equity offered: 1,724,138 new shares, representing up to 20.1% of Mosaic Enterprises Limited at the conclusion of the offer.

Offer price per share: $0.58 cents.

Minimum investment amount: $493.00 (850 shares).

Type of share: Class B shares for investments under $25,000**. Class A shares for investments of $25,000 or more. 

** Class B shares are eligible for dividends and distribution of surplus assets but do not confer rights to attend shareholder meetings or vote at a company meeting.  On listing on the New Zealand or other national stock exchange (Listing) with the intention to allot securities in connection to the Listing the Class B shares would be reclassified as ordinary shares as per the company constitution.

Executive summary

We have developed a revolutionary online platform which allows insurance products to be sold in the same way Generation Y increasingly wants and expects. Our launch product Volo insurance cover can be purchased in 4 simple steps, entirely online.

To date, insurers have failed to address the needs of Generation Y. Despite being educated, financially savvy and aware of the need for insurance, Generation Y has the lowest uptake of life insurance among any adult age group, and research shows 20% of Generation Y fails to buy travel insurance before departing.

Our research shows the traditional insurance sales model presents Generation Y with many barriers to complete a sale while not engaging them via their preferred digital medium.

The founders have been deeply involved in the insurance, health and consulting sectors for many years. The genesis of the company began in mid-2014 when we began our research to validate the opportunity. Since then, we have moved rapidly to the stage where we are ready to launch.

  • We have built a new online insurance platform with architecture that allows no-advice, guaranteed acceptance insurance products to be sold in a way that engages Generation Y;
  •  We have identified the $537 million New Zealand Generation Y Life Insurance market and the $87 million New Zealand Generation Y Travel Insurance market as the first to target;
  •  The Life Insurance product underwritten by Partners Life Limited, and Travel Insurance product is to be underwritten by Cover-More Pty Ltd.; and
  •  These products are relevant to the lifestyles of Generation Y consumers, affordable (from less than $1 a day) and have been tested with three separate Generation Y focus groups.

Our vision is to provide a quick and affordable digital way for Generation Y to buy insurance and incorporate a claims experience, which pays out quickly – the sort of customer experience Generation Y has come to demand and expect. This coupled with our architecture enables us to disrupt how insurance is delivered.

 

Key statistics

Investment highlights

1. Disruptive service channel

  • Volo follows in the footsteps of well-established technological trends by making purchasing insurance as simple as booking a flight online. Our web and mobile app delivery channel matches what Generation Y demand when they make most purchases. Also, our insurance products are easy for consumers to understand.

2. Opportunity to serve a growing, underserved market

  • 18 – 35 year olds are expected to grow from 870,000 today to 1,100,000 by 2020. This group currently has the lowest rate of insurance uptake in New Zealand. Our platform is designed to align with the lifestyles of the young, presenting a significant opportunity to reach customers where traditional insurance sales methods have failed.

3. Highly attractive business model

  • The combination of online-only delivery, guaranteed acceptance and no-advice products, with a recurring revenue commission model allows us to eliminate many costs faced by traditional insurers, share the savings with the customer and provide returns to investors.

4. Strong validation through support from key partners

  • Partners Life Limited and Cover-More Pty Ltd. are fast-growing players in the New Zealand insurance market. The Life Insurance product is to be underwritten by Partners Life Limited, and the Travel Insurance Product by Cover-More Pty Ltd. In addition, they continue to provide us with financial, marketing and legal resource support.

5. Underlying business model and platform applicable globally

  • Our distribution infrastructure has the potential to be deployed in any insurance market. Incumbent insurance providers are becoming aware of the failings of traditional insurance sales methods when it comes to selling to Generation Y, and this provides potential opportunities to leverage our technology beyond New Zealand.
Investor rewards
Business model

Our products are only available using the web and mobile app infrastructure. This allows us to avoid the costs associated with a large direct sales force, or a brick-and-mortar physical storefront with advisers, branches and large call centres.

The Mosaic infrastructure is used to sell “guaranteed acceptance, no-advice” life and travel insurance products direct to consumers which dramatically reduces costs compared to the traditional sales model.

  • Guaranteed acceptance means that, so long as users meet the basic criteria, buying is easy and coverage will be approved instantly. This benefits the customer through lower costs (as we do not require staff to check and manually approve applications) and improves the customer experience as cover is granted as soon as payment is processed.
  • No-advice means the products are sold to consumers without personalised consideration of their circumstances – consumers must choose this for themselves. This critical distinction means we are able to work within the insurance licence of our underwriter.
  • Our revenues are commissions on an as-earned premium basis. This means we are paid a recurring revenue fee by the underwriters for every day a user remains covered. With our existing underwriting partners, we will be paid 35% of the customer premiums. This compares favourably to traditional brokers where a large upfront commission is paid for new insurance clients, with clawback provisions in the event the client cancels their policy within a certain amount of time.

We believe the combination of online-only delivery, guaranteed acceptance, no-advice products, and the as-earned premium revenue model is a highly attractive business model, which allows us to eliminate many traditional costs, share these savings with the customer and provide returns to investors.

Our business model has been endorsed by the direct support we have received from our two key underwriters: Partners Life Limited and Cover-More Pty Limited. In addition, they continue to provide Mosaic with financial & resource support – for example:

  • Partners Life Limited has advanced Mosaic Enterprises Limited with $250,000 in pre-paid commission in anticipation of the product launch. This advance is non-dilutive;
  • Both of our underwriting partners have committed their own staff to assist with social media advertising and legal resources to assist with compliance; and
  • Partners Life Limited has endorsed our team in the video that accompanies this offer.
Milestones & history

The team at Mosaic have created an elegant and easy-to-use platform.  The launch brand and website is called Volo, where Generation Ys can purchase insurance products.

Our first product "Volo Lifestyle Cover" was launched in late August 2015, proving our technology platform choices because we have brought the product to market in under 9 months from the start of website development.

Below is a snapshot of the Volo platform.

 

  

 

Strategy & vision

Mosaic Enterprises Limited goal was to launch an innovative insurance platform to allow us to revolutionise the New Zealand insurance industry.  Volo is the launch brand for our first suite of products, this brand features guaranteed acceptance for New Zealand resident Generation Y consumers.

  • Mosaic Enterprises Limited is the name of the company in which shares are being offered and that provides the technology platform
  • Volo is the consumer brand for our launch insurance product set

Philosophy

Our philosophy is that the customer should be able to buy insurance, make a claim and update their personal details all within a beautiful, intuitive digital interface.

“Volo” itself is Latin for “to fly, speed and move rapidly”. The vision for Volo is that it will move at the speed that Generation Y desires: i.e. rapidly, focusing on delivering now, not later.  It also has the meaning "what one desires or wishes" which fits well with claims payments to be processed directly to the customers debit/credit cards or bank account.

Volo customers will be empowered to: 

  • Manage the risk of their lifestyle choices at an affordable cost
  • Set their own service preferences
  • Simplify management of their risk and travel records
  • Take ownership of the management of their health records

Product Strategy

Volo’s products are only be purchasable via its digital platforms, in keeping with our desire to be a low-overhead platform while appealing to Generation Y. Volo Lifestyle has a distributor agreement in place with Partners Life Limited and Volo Travel has an agreement with Cover-More Pty Ltd.

Until the dedicated Apple and Android Volo Apps are developed in 2016, Volo is available on the website, which is already optimised using a responsive layout for viewing on mobile devices such as smart phones and tablets.

Volo will deliver the following products to the market in 2015:

  • Volo Lifestyle (delivered August 2015) – a single, easy to understand product that in the event of an accident, sickness, injury, diagnosis of disease/condition or death, provides predetermined cash benefits. Unlike other products, it contains the benefits normally found in the separate products of: Life, Income Protection, Trauma, TPD and Health. This is underwritten by Partners Life Limited;
  • Volo Travel – a product aligned to Generation Y’s travel lifestyle. Worldwide emergency access 24/7, online claiming and including travel alterations. Underwritten by Cover-More Pty Ltd; and 
  • Volo Lock Box – electronic, encrypted, secure storage for Generation Y’s to hold: Medical Summaries, Personal ID, Electronic Signatures, Travel Preferences, Policy Documents, and other valuable documents. This enables customers to manage their travel and insurance affairs electronically, effectively and securely.

Volo will deliver the following products to the market in 2016:

  • Mobile App – The Volo App for Apple and Android devices which provides streamlined claiming, alerts and world-wide assistance;
  • Personal health and risk management– integration of lifestyle metrics with the customer health records; empowering self-management and encouraging lifestyle changes through personalised intervention; and
  • Affinity benefits – integration with 3rd party services that offer benefits to the customer’s lifestyle such as health infometrics and loyalty programmes.

Volo intends to design and validate the following further products in 2016:

  • Full health insurance product;
  • Generation Y business insurance product; and
  • Post Generation Y insurance products.

Marketing Strategy

Volo’s marketing strategy is aligned with the sales channel - focused on online and digital media.

The four key components of our online marketing strategy were chosen specifically for cost benefits and engagement of Generation Y; they are:

  • Social Media Strategy: Advertising and content marketing on Facebook, YouTube, Instagram and LinkedIn;
  • Retargeting: Re-engaging individuals who make it part way through the signup process;
  • Paid Online Advertising: Google Adwords, stuff.co.nz, advertorials; and
  • Search Engine Optimisation: Leveraging the most important words used by our target customers to ensure Volo shows up prominently in search engine results.

Hot Spots- will enable the Volo App to make additional offers to customers; example Hot Spots include: 

  • Medical – General Practitioner Clinics, Maternity Wards, Hospitals etc.
  • Airports
  • Travel Agents
  • Living Location (i.e. when system identifies this has changed)
  • Work Location (i.e. when system identifies this has changed)
Use of funds

The founders have funded the development of Volo to date, with the technology platform now launched and customers buying the Volo Lifestyle product online.

With the product live, we now need to employ administration staff, however, most personnel will be contracted to provide maximum flexibility. The founders have been contracted at concessionary rates, approximately 40% of market rates. Subsequent to production, these contracts will move closer to the market with a total cost of approximately $300,000.00 p.a. 

Mosaic is seeking $400k to $1.0m in this offer. The minimum raise of $400k enables the launch of Volo Lifestyle, Volo Travel and Volo Lock Box. Raising more than $400k speeds up the process of new product development, and enables initial funding for the Volo App and personal health and risk management.

Upon successful $1.0m fund raising (between this crowdfunding offer and other fund raising if required), the directors of Volo believe there will be sufficient cash to cover operations until July 2016, based on forecast expenditure.  By this date the company is expected to be self-funding and generating positive cash flow. 

The funds applied to salaries will enable the creation of the following new full time positions:

  • Operations Manager
  • 3 Call Centre and Customer Support positions
  • Marketing Assistant
  • Software Tester
Financial summary

Mosaic is targeting $14.3 million in revenue and $6.7 million in profit after tax in FY2020 from its suite of insurance products, including selling to 5.4% of the forecast New Zealand population of 18 – 35 year olds in 2020. To understand Mosaic’s capital requirements and potential financial performance to reach this aim, an exercise in financial modelling has been undertaken in conjunction with our advisers.

* = Total raise of $1 million including this crowdfunding offer and additional funding if required

Competitive advantage

The Generation Y segment has been largely underserved with insurance due mainly to the business model of the incumbent providers being centred on advice through Brokers and In-House Advisers – a delivery channel which which is not appealing to the Generation Y customer. Also, the products offered do not resonate with Generation Y, being difficult to understand and ill-suited to the needs of their lifestyles.

We believe Volo’s competitive advantage when targeting Generation Y consumers are:

  1. Smart electronic platform, engaging for Generation Y, making purchase straightforward;
  2. Insurance products aligned to the dynamic lifestyles of Generation Y consumers;
  3. Easily understood terms and conditions;
  4. Affordable (options available from less than $1 per day);
  5. Guaranteed acceptance means cover is approved from time of payment;
  6. Location detection provides reminders of when insurance may be needed (e.g. at airports);
  7. 24/7 worldwide coverage; and
  8. Known Benefits at time of purchase.

Traditional Insurers are heavily constrained by their existing marketing channels, outdated systems and processes and expensive commission structures. The guaranteed acceptance no-advice business model disrupts the traditional face-to-face insurance model and cost structure.

At present, there is no single comparable product in the New Zealand market that offers the combination of cover offered by Volo Lifestyle and Volo Travel.

To get the same level of cover from our competitors, a consumer would need to buy several different policies. For example, Volo Lifestyle policy of $4,000 per month in benefits for $30 plus GST per month. A similar set of benefits across a competitor’s products would involve buying separate products of: Term Life, Trauma, TPD Income Protection and some Medical/Accident cover and the combined cost of these ranges from $65 to $80 per month.

Anticipated Competitor Reaction

Although we believe Volo has a great head-start, traditional insurers are aware of their limitations with Generation Y, and we expect them to eventually react with products of their own to compete in the Generation Y category.

By their nature, legacy systems are expensive to change and large organisations, like insurance companies, are also slow to change. This provides a window of at least 18 months before the traditional insurers can react and change their product design and systems to produce comparable products and distribution channels.

One potential strategy of our competitors may be to acquire Mosaic Enterprises Limited in order to gain access to our technology platform and IP rather than develop their own in-house. We explain this possibility in more detail in the next section “Exit Strategy”.

Exit strategy

We have launched our first Volo Product on the Volo Website and have new products in development for launch in 2015. The Volo app for iOS and Android will be released in 2016 and we will continue to further develop our product offering using feedback gained from our customers to increase our market share of Generation Y customers in New Zealand.

The directors expect that the successful implementation of these strategies, along with proof of platform, will lead to an increased valuation of the business.

Opportunities also exist to license the technology; these provide significant income potential but are not included in the valuation.

The directors of MOSAIC believe there are at least three potential liquidity possibilities for shareholders who invest through this offer:

Trade sale of the technology platform to:

  • One of our main insurance partners, to bring the platform being used to distribute their products in-house;
  • A competing New Zealand insurance company that wishes to gain access to our intellectual property, customers and Generation Y insights;
  • An overseas insurance company wanting to gain access to New Zealand and our technology – in particular, one that is already ahead of the curve in understanding the need for web and mobile services to reach Generation Y customers; or
  • A financial investor such as venture capital or private equity.

In the event of a trade sale, the expertise of Murray Lilley will be utilised, as he has already negotiated the successful exit of Kumar Lilley Associates Ltd which was sold to KPMG.

Exchange Listing:

  • A listing on a New Zealand exchange such as NXT or NZX would require successful execution of our growth strategies over the next 3 – 5 years. Exchange listings can be structured to allow existing shareholders to sell some or all of their shares at the time of the listing and generally creates greater liquidity for shares once listed.

Shareholder Marketplace:

  • Shareholders can sell their shares by private agreement. Management and Board are fully supportive of shareholders wishing to buy or sell and will assist wherever possible.
Mosaic signs first international licensing agreement

Updated - 9 November 2015 and offer re-opened

Mosaic is excited to formally announce they have signed their first international contract for their technology platform and Volo Lifestyle products. “This builds on the strong start and provides further validation of Volo and the technology platform,” say Murray Lilley and Trevor Boone, founders and major shareholders in the company; “it also means increased company value by providing immediate and long term cash flow”. 

Contract details are commercially sensitive, however the initial payments represent more than the equity crowdfunding that Mosaic is currently raising on the Equitise platform.  Chief Marketing Officer and co-founder Andy Baird says "We're excited about what this means for existing shareholders and any new investors who join before the crowdfunding finishes."

Milestones & history

The team at Mosaic have created an elegant and easy-to-use platform.  The launch brand and website is called Volo, where Generation Ys can purchase insurance products.

Our first product "Volo Lifestyle Cover" was launched in late August 2015, proving our technology platform choices because we have brought the product to market in under 9 months from the start of website development.

Below is a snapshot of the Volo platform.

 

  

 

Strategy & vision

Mosaic Enterprises Limited goal was to launch an innovative insurance platform to allow us to revolutionise the New Zealand insurance industry.  Volo is the launch brand for our first suite of products, this brand features guaranteed acceptance for New Zealand resident Generation Y consumers.

  • Mosaic Enterprises Limited is the name of the company in which shares are being offered and that provides the technology platform
  • Volo is the consumer brand for our launch insurance product set

Philosophy

Our philosophy is that the customer should be able to buy insurance, make a claim and update their personal details all within a beautiful, intuitive digital interface.

“Volo” itself is Latin for “to fly, speed and move rapidly”. The vision for Volo is that it will move at the speed that Generation Y desires: i.e. rapidly, focusing on delivering now, not later.  It also has the meaning "what one desires or wishes" which fits well with claims payments to be processed directly to the customers debit/credit cards or bank account.

Volo customers will be empowered to: 

  • Manage the risk of their lifestyle choices at an affordable cost
  • Set their own service preferences
  • Simplify management of their risk and travel records
  • Take ownership of the management of their health records

Product Strategy

Volo’s products are only be purchasable via its digital platforms, in keeping with our desire to be a low-overhead platform while appealing to Generation Y. Volo Lifestyle has a distributor agreement in place with Partners Life Limited and Volo Travel has an agreement with Cover-More Pty Ltd.

Until the dedicated Apple and Android Volo Apps are developed in 2016, Volo is available on the website, which is already optimised using a responsive layout for viewing on mobile devices such as smart phones and tablets.

Volo will deliver the following products to the market in 2015:

  • Volo Lifestyle (delivered August 2015) – a single, easy to understand product that in the event of an accident, sickness, injury, diagnosis of disease/condition or death, provides predetermined cash benefits. Unlike other products, it contains the benefits normally found in the separate products of: Life, Income Protection, Trauma, TPD and Health. This is underwritten by Partners Life Limited;
  • Volo Travel – a product aligned to Generation Y’s travel lifestyle. Worldwide emergency access 24/7, online claiming and including travel alterations. Underwritten by Cover-More Pty Ltd; and 
  • Volo Lock Box – electronic, encrypted, secure storage for Generation Y’s to hold: Medical Summaries, Personal ID, Electronic Signatures, Travel Preferences, Policy Documents, and other valuable documents. This enables customers to manage their travel and insurance affairs electronically, effectively and securely.

Volo will deliver the following products to the market in 2016:

  • Mobile App – The Volo App for Apple and Android devices which provides streamlined claiming, alerts and world-wide assistance;
  • Personal health and risk management– integration of lifestyle metrics with the customer health records; empowering self-management and encouraging lifestyle changes through personalised intervention; and
  • Affinity benefits – integration with 3rd party services that offer benefits to the customer’s lifestyle such as health infometrics and loyalty programmes.

Volo intends to design and validate the following further products in 2016:

  • Full health insurance product;
  • Generation Y business insurance product; and
  • Post Generation Y insurance products.

Marketing Strategy

Volo’s marketing strategy is aligned with the sales channel - focused on online and digital media.

The four key components of our online marketing strategy were chosen specifically for cost benefits and engagement of Generation Y; they are:

  • Social Media Strategy: Advertising and content marketing on Facebook, YouTube, Instagram and LinkedIn;
  • Retargeting: Re-engaging individuals who make it part way through the signup process;
  • Paid Online Advertising: Google Adwords, stuff.co.nz, advertorials; and
  • Search Engine Optimisation: Leveraging the most important words used by our target customers to ensure Volo shows up prominently in search engine results.

Hot Spots- will enable the Volo App to make additional offers to customers; example Hot Spots include: 

  • Medical – General Practitioner Clinics, Maternity Wards, Hospitals etc.
  • Airports
  • Travel Agents
  • Living Location (i.e. when system identifies this has changed)
  • Work Location (i.e. when system identifies this has changed)
Executive summary
Market overview

Introduction

The need for insurance to facilitate protection against risk is a very old one. However, as in many other industries, the way that consumers would prefer access to this is changing. Mosaic believes Generation Y consumers, in particular, have preferences that are not being adequately served by traditional sales channels.

Insurance is a huge, global industry that allows individuals and organisations to manage risk exposure. Most will be familiar with the basic insurance business model:

consumers make regular payments to insurance companies in exchange for the promise that the insurance company will pay out in the event of the consumer suffering an adverse event.

Like insurance globally, New Zealand’s insurance market is highly regulated and subject to capital controls that form strong barriers to entry by local and overseas competitors. The Financial Markets Conduct Act controls the organisations which provide financial advice in New Zealand.

The total New Zealand Life insurance market was worth $1.9B in 2014. The largest insurance providers are Sovereign, AMP, OnePath, Asteron, Fidelity, AIA, Partners Life and Banks. In addition, the New Zealand government provides workers' compensation insurance as a regulated state monopoly through ACC.

Insurance can be segmented in several ways, including:

  • Category (e.g. individual insurance, company insurance, reinsurance);
  • Product (e.g. life insurance, health insurance, home and contents insurance);
  • Consumer (e.g. age, income level, life stage); and
  • Channel (e.g. direct sales, brokers, online).

The New Zealand Generation-Y Insurance Market

There are 870,000 18 – 35 year olds (a generation of people commonly known as “Generation Y”) in New Zealand, expected to increase to 110,000 by 2020. This group is characterised by high education rates, high propensity to travel overseas, and high use of smartphone technology and social media.

Some more facts about Generation Y in New Zealanders:

  • In urban areas like Auckland and Wellington, 40% or more earn over $40,000 per annum; 
  • They are the most educated of any generation and are much more likely to be heavy internet users;
  • They recognise the need to protect themselves against adverse events, but have low actual insurance coverage rates relative to the rest of the New Zealand population; and
  • Generation Y consumers have a high look-rate for insurance, but their completion rates are low.

All this indicates Generation Y are educated and financially savvy enough to know that insurance is important to protect their lifestyle, but are simply not well-suited to being engaged through the traditional direct personal relationship model currently heavily used in New Zealand.

Generation Y consumers want information available in the moment and instant gratification - they have come to expect the buying process of any product to be seamless and straightforward online, without requiring face-to-face interaction; and that’s where Volo comes in. 

Life Insurance Market Size

By international standards, all adult New Zealanders have very low levels of personal life insurance cover even if ACC premiums are included. 60% of disabilities that last longer than 6 months in New Zealand are illnesses which are not covered by ACC.

New Zealand ranks 28th out of 31 in the OECD in personal life risk cover. Research undertaken by the Financial Services Council, NZEIR and Massey University confirms significant levels of under-insurance by Generation X (Born 1965 - 1980) and Generation Y (Born 1981 – 1995).

Adult New Zealand Life Under-Insurance, Split By Age Group

Generation Y represents the largest proportion of the population that are uninsured or under insured. Focus group research conducted by Mosaic confirms that Generation Y’s have very low product uptake levels due to the complexity of current products and their avoidance of face-to-face sales people.

The figures above include uninsurable occupations such as military, police and firefighters. We have conducted further research to size the total insurable Generation Y market and have found 840,000 New Zealanders are Generation Y and insurable. Given an average price of $1.75 per day for the Volo Life Product, this gives an estimated potential market size of $537 million per year for Generation Y Life Insurance in New Zealand.

Travel Insurance

In 2014 there were 550,000 individual overseas trips made by Generation Y New Zealanders. This group have the highest number of days absent from the country per trip with an average trip length of approximately 22 days. Over 65% of Generation Y New Zealanders look for travel insurance online and over 20% forget to buy travel insurance before departure. 

Based on the daily cost of insurance per day per destination, this represents a potential market size of $87 million per year for Generation Y Travel Insurance in New Zealand– of this, approximately 60 - 65% is currently being fulfilled.

Target market

We are targeting the undersold New Zealand Generation Y market (those currently aged 18 – 35 years old) with insurance products that meet their needs and are simple to purchase via their preferred method – web and mobile.

When existing Volo customers turn 36, we will aim to serve these customers with different products to meet their changing needs. These products are on the 2016 research and development road map as detailed later in this document.

For more about our target market segments and why we have decided to pursue these particular opportunities, please refer to the “Industry Overview” section of the Offer Document (IM) in the documents tab above.

Competitive landscape

The Generation Y segment has been largely underserved with insurance due mainly to the business model of the incumbent providers being centred on advice through Brokers and In-House Advisers – a delivery channel which which is not appealing to the Generation Y customer. Also, the products offered do not resonate with Generation Y, being difficult to understand and ill-suited to the needs of their lifestyles.

We believe Volo’s competitive advantage when targeting Generation Y consumers are:

  • Smart electronic platform, engaging for Generation Y, making purchase straightforward;
  • Insurance products aligned to the dynamic lifestyles of Generation Y consumers;
  • Easily understood terms and conditions;
  • Affordable (options available from less than $1 per day);
  • Guaranteed acceptance means cover is approved from time of payment;
  • Location detection provides reminders of when insurance may be needed (e.g. at airports);
  • 24/7 worldwide coverage; and
  • Known Benefits at time of purchase.

Traditional Insurers are heavily constrained by their existing marketing channels, outdated systems and processes and expensive commission structures. The guaranteed acceptance no-advice business model disrupts the traditional face-to-face insurance model and cost structure.

At present, there is no single comparable product in the New Zealand market that offers the combination of cover offered by Volo Lifestyle and Volo Travel.

To get the same level of cover from our competitors, a consumer would need to buy several different policies. For example, Volo Lifestyle policy of $4,000 per month in benefits for $30 plus GST per month. A similar set of benefits across a competitor’s products would involve buying separate products of: Term Life, Trauma, TPD Income Protection and some Medical/Accident cover and the combined cost of these ranges from $65 to $80 per month.

Potential returns

We have launched our first Volo Product on the Volo Website and have new products in development for launch in 2015. The Volo app for iOS and Android will be released in 2016 and we will continue to further develop our product offering using feedback gained from our customers to increase our market share of Generation Y customers in New Zealand.

The directors expect that the successful implementation of these strategies, along with proof of platform, will lead to an increased valuation of the business.

Opportunities exist to license the technology; these provide significant income potential but are not included in the valuation.

The directors of MOSAIC believe there are at least three potential liquidity possibilities for shareholders who invest through this offer:

Trade sale of the technology platform to:

  • One of our main insurance partners, to bring the platform being used to distribute their products in-house;
  • A competing New Zealand insurance company that wishes to gain access to our intellectual property, customers and Generation Y insights;
  • An overseas insurance company wanting to gain access to New Zealand and our technology – in particular, one that is already ahead of the curve in understanding the need for web and mobile services to reach Generation Y customers; or
  • A financial investor such as venture capital or private equity.

Note: In the event of a trade sale, the expertise of Murray Lilley will be utilised, as he has already negotiated the successful exit of Kumar LIlley Associates Ltd which was sold to KPMG.

 Exchange Listing:

  • A listing on a New Zealand exchange such as NXT or NZX would require successful execution of our growth strategies over the next 3 – 5 years. Exchange listings can be structured to allow existing shareholders to sell some or all of their shares at the time of the listing and generally creates greater liquidity for shares once listed.

Shareholder Marketplace:

  • Shareholders can sell their shares by private agreement. Management and Board are fully supportive of shareholders wishing to buy or sell and will assist wherever possible.
Jamie Coltman

See profile
TJ Boone

See profile
Murray Lilley

See profile
Andy Baird

See profile
Eben Bruyns

See profile

Information Memorandum

Full Information Memorandum for Mosaic Enterprises Limited

Download

Mosaic New Contract Update

Mosaic has signed a licensing agreement with an Australian provider to license the Mosaic platform.

Download

The investors below have committed capital to the business in this funding round.

Craig Jakich

2015-11-19 21:36:01

CJ

See profile
William Taylor

2015-11-19 20:15:50

See profile
Chris

2015-11-19 09:47:33

Person

2015-11-19 08:59:36

__00__

2015-11-19 08:17:33

Andrew Mc ewing

2015-11-19 06:11:55

See profile
Jonathan Cowperthwaite

2015-11-19 05:25:42

See profile
DIANA GILBERT

2015-11-19 04:51:46

CEO

See profile
NGL

2015-11-19 01:59:42

Ben Tyler

2015-11-19 01:28:11

See profile
Nessie

2015-11-18 22:42:48

Andrew Laloli

2015-11-18 06:13:02

See profile
Mel

2015-11-17 18:24:31

Mrs. B

2015-11-13 18:01:23

J

2015-11-11 17:22:44

jason roberts

2015-11-09 11:20:32

CEO

See profile
SAL

2015-11-09 10:55:26

Christian Mahony

2015-11-09 09:20:23

See profile
Tim Chesterfield

2015-10-27 21:41:54

CIO

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Tomo

2015-10-17 20:40:45

Melissa Davies

2015-10-06 10:22:18

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Daniel Alexander

2015-10-03 17:02:55

See profile
John Heritage

2015-09-30 09:28:08

See profile
PK

2015-09-29 18:32:42

Oliver Gibbs

2015-09-29 15:18:49

See profile
Abhijit Zantye

2015-09-21 11:35:53

Investor

See profile
javier eguren

2015-09-18 16:22:42

See profile
Therese

2015-09-15 18:40:08

Vincent Saunders

2015-09-15 17:56:25

See profile
Alice Lilley

2015-09-15 17:43:45

See profile

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