A Kenyan insurtech startup Lami has raised $1.8m to scale its product offerings across sub-Saharan Africa.
While this is good news, it sorts of gets one curious to understand Lami’s customer base considering that the insurance market in Africa is low, with <3% penetration. Well it appears the brand has done its home work and is strategically positioned to make this a success, that is the only way investors could have been convinced to back it up.
A Mckinsey study in 2018 puts Africa’s insurance market stand at a measly 3% penetration rate and if South Africa market is to be excluded, this number comes down to just 1.12%.
According to the CEO, Jihan Abass the platform’s aim is to democratize insurance as she tells TechCrunch,
“For us, the main problem we wanted to solve was that 97% of Africans don’t buy insurance. We were trying to understand the methodology behind that, especially in Kenya where there are over 50 insurance companies but the penetration level is 2.4%,” she told TechCrunch.
“The driving force for us was making insurance widely available. We felt that building the technological infrastructure to facilitate the distribution of insurance was the best way to increase the penetration level in Africa.”
But selling directly to consumers would be a meticulous process as they rarely buy insurance from trusted organizations, let alone a third-party company. So Lami adopted a B2B2C approach to leverage the trust already built by platforms that converse with customers daily and innovate around it.
Via an API, it thus allows businesses like banks, startups and organizations to offer digital insurance products to their users. The product can also be used by partner businesses to manage their own insurance needs.
Some customers like Stanbic Bank in Kenya use Lami’s API to run insurance operations; HR platform WorkPay makes insurance products available to the businesses using its platform. With over 20 insurance writers, the company is also launching an insurance marketplace on e-commerce platform Jumia.
Users can get a quote for motor, medical or other tailored insurance products through its API. They also can customize the benefits and adjust the premium to suit them, get their policy documents and access claims.
Typically, it takes about 90 days for claims to be processed for an average African insurer. Abass said Lami has reduced this to a week — it is one way the three-year-old company has developed trust with customers.
