The insurtech sector in Africa is rapidly evolving, driven by technological advancements and a pressing need for accessible insurance solutions.
While significant progress has been made, especially in countries like Nigeria, Kenya, and South Africa, challenges such as regulatory complexities and low insurance penetration persist.
Despite these challenges, driven by increasing smartphone penetration, internet connectivity, and a burgeoning middle class, insurtech is poised to revolutionise the traditional insurance landscape across the continent.
According to the African Insurance Market 2022 report by PwC Africa, the African Insurtech market was valued at approximately $1.2 billion in 2022 and is projected to grow at a CAGR of 25% over the next five years.
The Digital Insurance in Africa: Growth and Opportunities research by Allianz further estimates that digital insurance penetration in Africa could reach 20%, up from less than 5% in 2020.
Additionally, Disrupt Africa’s Insurtech Investment Trends in Africa 2023 indicates that African Insurtech startups attracted over $300 million in venture capital funding, marking a 40% increase compared to 2022.
It is worth noting that African women founders are increasingly contributing to this dynamic space, although their representation remains limited as compared to their male counterparts.
As per a 2023 report by the African Women in Tech network, women constitute approximately 15% of founders in the African insurtech ecosystem.
Women’s Entrepreneurship Platform (WEP) data indicates that there are around 30 active African women-led insurtech startups across various countries.
Even with challenges such as access to funding, limited access to networking opportunities and societal barriers, continued support through funding, mentorship, and inclusive policies are crucial in fostering a more diverse and robust Insurtech ecosystem across the continent.
In this interview with TechTrends Media, Jihan Abass, founder and CEO of Lami Technologies, shares her journey as a female insurtech startup founder and one of the first African women to raise $5.5 million for her company.
In a bid to address Africa’s pressing insurance gap issue, her main focus initially was filling the massive insurance gap across the continent.
After pivoting her strategy, Abass shares insights on how she and her team found success with a new agent-driven model that’s now transforming how insurance is sold in Africa.
Their platform empowers agents to sell SME Work Injury Benefits Act (WIBA), personal accident, and motor insurance, and since the launch of this channel, the company has reported doubling its revenue, now generating over $300,000 (Sh 38.7 million) per month.
Who is Jihan Abass, what inspired you to start Lami, and how did you identify the significant insurance gap across Africa?
I grew up at the Coast, as I am originally from Mombasa, and then moved to the UK when I was 18 years old for my university studies.
At that time, I studied finance and my first job was actually as a futures trader in London. After that, I decided to do my MBA so I went to Oxford University. Once I completed my studies, I then decided to set up Lami, which is basically the holding company of Griffin Motor Insurance. I think it’s an evolution of an initial product that we had.
The main objective for us was always the same, even though we’ve pivoted and changed our approach, our main objective has always been to democratise access to insurance products across Africa because there’s a very low insurance penetration level.
As Lami, we believe that using technology is the key to changing that by building the infrastructure and the rails for insurance products to actually work in a digital ecosystem.
Our approach to getting to where we are today has been a bit unconventional in the sense that we tested about 12 different use cases of our technology. Ideally, the same core technology that we had, which is an end-to-end insurance API that caters to the whole journey, we now created different front-end experiences to test.
Some of that testing was B2C, which was Griffin initially, a sort of motor insurance product. Then we decided to test embedded insurance products inside banking, digital, and lending platforms. We wanted to test and see how we could combine technology and insurance.
The third channel we tested was digital SME products. How can we digitise the sale of SME products? SME products historically in Kenya are the least digital experience that you could ever have for buying insurance.
Finally, the agent channel which was the last channel that we were testing. Ideally, it was a process of elimination over time to sort of decide to focus only on one channel after we had witnessed that some of these other channels lacked the success that we had anticipated.
In my own opinion, I think this was as a result of us being way too ahead of the market because we were using a lot of technology.
Some platforms just can’t integrate because they’re focused on their own business. Some banks, for example, can take ages to integrate your product so we were a bit ahead of the curve.
Now with this agent channel, we’re just empowering the people who are actually selling insurance so that they can have a better experience in the way that they’re selling insurance products.
As a woman founder, how are you navigating this insurtech space and while coming up with Lami, what are some of the challenges you faced?
I think the first challenge that we always faced was the fact that insurtech is a sector of fintech that is not that exciting to investors, and not that exciting to other people because it seems like a very big problem to solve because of the 97% uninsured market across Africa.
Even with the feedback we always got, the conversation was always how are we actually going to do this?
“The problem you’re solving is too big.” We used to get that a lot, especially when we were doing the fundraising process.
That has always been a difficult one to navigate because the opportunity is huge, but of course, the problem is massive as well. Actually, finding the right balance so that you can convince people to come on board and to understand the reason why you’re doing what you’re doing, was always one of the challenges.
Also with a sector like insurtech, you have to build everything. You have to build a whole ecosystem because it doesn’t exist.
Historically, agents that we today have on our platform, were selling insurance with paper and pen. They would call each insurance company one at a time, give them the information, wait for them to generate a quote, come back to them and write it down and then send that to their customer.
So that whole ecosystem, we had to digitise it. It takes a lot of work, a lot of investment, and a lot of time to build all those components that will actually make your product succeed and work.
That was also a big challenge that we faced. Another thing was also finding a product market fit. We tested and tested so many things until finally, after all that time, we landed on a model that we think works. It takes a lot of patience and we were good with how we built the platform.
We spent a lot of time and effort on it, which meant that it was flexible enough to launch a new channel which we did in two months. It would have been better if we found the product market fit sooner but now that we’re there, I think we see a growth opportunity in front of us.
You mentioned that there is a 97% uninsured market across Africa and looking at your business model pivot, you help agents digitise their processes. How do you ensure that these agents are equipped to navigate the digital landscape?
We actually have our corporate office in Westlands, and we recently also opened another office in the CBD, specifically for agents.
In the second office, we conduct training sessions for agents where they can learn how to sell insurance products digitally and also learn how to use the platform.
We have also made it possible that if they want to come in just to ask questions or if they’re stuck in any part of the process, they can come in at any time and somebody will be there to assist them.
We support the agents by empowering them with all the information that they need, so that when they go to the customer, they have all the information at their fingertips, and they can explain in detail to a customer why they should be buying certain products.
It is unfortunate that here in Africa, people rely on one source of income, whether it’s their trucks, whether it’s their farm, but they do not understand the value of protecting it. So it’s important for the agent to be able to give that level of understanding that if something goes wrong, it’s better to have this asset of yours protected than not.
Our plan was to create an open space for them to feel that they’re able to also grow. The average agent, historically, worked with only three insurance companies. That means that their access to customers was limited.
Sometimes, for example, they would have to turn a customer down because they don’t have a relationship with the insurance company that the customer is looking for.
Today, when they’re using our platform, they can access 40 insurance companies, and over 300 products. So it actually opens up their opportunities for them significantly because they never have to turn down a customer. Basically, every product is available for them to sell. This means that it’s just at the click of a button, which I think has been very exciting for the agents that have come onto our platform.
Speaking of agents, across the different markets, what does the uptake of the product look like?
At the moment, with this agent channel, we’ve only launched in Kenya. This is only in Mombasa and Nairobi. We’ve not yet gone beyond these two cities.
However, the uptake so far has been really strong as we have a thousand agents on the platform, and about 850 of these are active monthly. It’s quite significant already based on purely word of mouth. We haven’t done marketing as we’ve not spent on any sort of awareness campaign for the product. We’ve been lucky in the sense that agents find our product useful enough to tell other agents about it, which has been great.
When we look at addressing the insurance gap across Africa, as Lami, what strategies are you employing to close this gap and how do you see technology playing a role in changing the insurtech sector in Africa?
The first step is definitely to digitise the existing market, which is what we’re doing now by targeting agents.
Then I think the next step after that would be to empower these agents to sell to more customers, equipping them with training, giving them the products and also understanding of the products that they can sell to help them cross-sell and upsell to their customers and also to new clients. That’s how we’re approaching it.
The key thing with insurance is that most of the time people have to be convinced that they need insurance.
They need a person to talk to because they want to be able to trust that this insurance is going to work for them.
In this sense, we want to maintain that human element by empowering agents to be able to sell more products and be more efficient in that process through the use of our technology.
Our entire journey for the sale of a product is digital. Before, when an agent would sell a policy, it would take them two days to give it to a customer. Now they can give a policy to a customer in less than two minutes.
You can imagine how it helps them to also build trust with their customers as they are now having a conversation. It helps build confidence in insurance and also helps build confidence in the ability of the agent as well.
Hopefully, over time it will help to build the market as well.
Now that Lami is doubling its revenue, what are some of the factors that are contributing to this growth and how do you plan to scale further?
The main contribution is the fact that we’re adding agents onto the platform every single month. This has helped us reach a larger number of sales and also witness agents doing more sales with us.
Usually, as soon as they’re onboarded, after a month or so, they start doing bigger policies and start growing as well so that has been good to see.
Generally, our objective is to add more products, to diversify further, so that we can empower agents to sell a wider variety of products.
In your own opinion, how do you envision the African insurance landscape changing and evolving in the next five years?
The market now is very different from when we first started. You can imagine we were the first digital experience for car insurance when we launched in 2020.
I think the sector will continue to digitise further as I anticipate that there’s going to be a lot more digital offerings, and a lot more insurance companies open to partnerships with digital platforms as well for the distribution of insurance products.
I also think we’re going to see a lot more insurtechs as well coming into this space and basically, a wider digitisation of the whole ecosystem.
This will equally involve the use of more robust technologies like Al for claims as this segment of an insurance policy sale is still one that has a lot of friction. I think we’re going to see a lot more improvements in that as well.
What is your advice to other upcoming women entrepreneurs who are looking to venture into the world of insurtech?
The main thing is to focus on product market fit and not to spend too much before. Don’t spend on scaling before you’ve found the product market fit.
This is one of those things that’s very easy to fall into, especially when investors are sort of telling you, ‘We want you to grow.’
Focusing on finding that product market fit first is critical for success, in my opinion. For us, as soon as we found the product market fit, the growth was just there. It comes with it. But when you don’t have it, then it’s more difficult to have sustainable growth.
As one of the first female African founders to raise $5.5 million for Lami, can you walk us through the journey?
It has definitely been rocky as the first part of our fundraiser was during Covid. I had never met my investors actually. I only spoke to them on Zoom throughout that whole fundraising process and you know a lot of them had never done due diligence remotely.
This was a big learning curve for all of us. Another hurdle is that there’s money for fintech, but not so much money for insurtech because people are not that excited about it.
People are more excited about credit and these more traditional fintech verticals as opposed to insurtech because it’s unproven.
It hasn’t been a proven model yet so I think that’s always been difficult in the sense that you have to really be passionate about the problem that you’re solving.
You have to really be able to relay this information well because investors are sometimes sceptical about just the insurtech segment as a whole, which works against us, of course.
I also think there are still a lot of gender biases within fundraising in general. When we look at our investor split, all our lead investors were women and I think that’s a testament to the fact that women investors are more likely to invest in female founders.
That has also been quite interesting to see in practice, that actually it is the case, at least for us, in my experience.
What makes you stand out from the competition and what is the roadmap looking like?
I think what differentiates us is our approach is the fact that we’re a tried and tested platform. We’ve had different go-to-market strategies before landing on this one that we believe is the one that we would see success with. So that’s the first thing.
The second thing is our technology. A lot of the time insurtechs don’t focus a lot on the kind of technology that they’re building. It’s not a core focus of theirs to have robust technology that is flexible and can scale.
For us, we spent a lot of time on this. We don’t launch a product if it’s not digital, and if the whole journey is on digital. That’s a key thing for us, which I think differentiates us quite a lot.
In terms of where we see ourselves, our focus for the next few months is definitely to continue to grow within Kenya. From there, it’s going to now be the next step of replicating this model in other markets that have similar structures to the one that we have here. That’s going to be our focus probably towards the end of next year.
Away from competition, how do you collaborate with other key players who are in this space to ensure that partnerships play a significant role in Lami’s growth?
We collaborate and for us, our main partners are insurance companies. We have over 40 insurance providers on our platform who have partnered with us to sell their products through a digital channel.
We also have other collaborators such as KYC providers, payment providers, and re-insurers for insurance products as well. They offer other digital help that also aids in our digitising journey. We don’t do it ourselves.
We partner with others who are digital experts so that we’re able to focus on our core area, which is the insurance process.
As a founder and a CEO, what is the toughest lesson that you have learnt in your entrepreneurial journey?
I think the biggest lesson I’ve learnt is to trust my gut instinct. Trust your gut when you’re making these decisions, because often, it’s probably the right decision.
That has been the biggest learning point; just to have that confidence in the kinds of decisions that you’re making and that is the right decision, as opposed to sort of spending a lot of time thinking, going back and forth. Whenever I trust my intuition, the first decision is always the right decision, you know.
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