Africa’s insurance market is expected to grow at a compound annual growth rate (CAGR) of 7% between 2022 and 2028, reaching $120 billion. Though seemingly impressive, the insurance industry in Africa could be worth more if insurance penetration on the continent wasn’t extremely low, less than 3%, according to reports. As a result, traditional insurers have a finite market to sell their products, which in most cases are subpar compared to global standards.
Nevertheless, with a growing young population, increasing smartphone usage, less expensive internet access, and the proliferation of fintech apps, the insurtech market is taking shape as startups launch solutions to various customer segments attempting to deepen penetration. One solution based out of Nigeria, MyCover.ai, is announcing today that it has raised $1.25 million in pre-seed funding led by Pan-African venture capital fund Ventures Platform with participation from follow-on investors Founders Factory Africa and Techstars.
The Nigerian insurtech startup, which participated in the Techstars Toronto program last year, said it will use the investment to bolster its in-house operations and tech talent, invest heavily in its proprietary technology and strategically expand its operations into other African markets.
“We want to have a significant share in a market with less than 1% insurance penetration. While doing that, we want to expand to other African markets and go to other emerging markets, and eventually the rest of the world because we think our solution is applicable globally,” co-founder and CEO Adebowale Banjo told TechCrunch on a call.
Banjo founded MyCover.ai, which provides an open insurance API that enables businesses to embed insurance into their existing products and services, with CPO Alexander Igwe-Ifendu and CTO Fred Ebho in 2021. MyCover.ai intends to address several pain points in Africa’s insurance market. For one, insurance providers work in silos. As a result, there’s a lack of visibility into what they should optimize for consumers, leading to a lack of access on the customers’ part — and for those who have access, they pay premiums. In summary, the main challenges of the market include a lack of access, inadequate coverage, the unaffordability of insurance products and the poor customer experience surrounding insurance processes.
“There’s a problem with access and distribution as a whole, especially with the kind of products insurance companies were churning out and what people needed and could afford,” Banjo said, explaining why MyCover.ai was built. “We also found out that handshake between insurance companies is not there, the visibility and the data required to improve on products and underwriting progressively was lacking.”
Initially, the founders built a comparison site, pitting insurance providers against each other. But after further market research, they pivoted to an infrastructural play operating across three essential touch points: underwriting and product development, distribution, and insurance claims. They believed this would quickly power the adoption and growth of insurance in Nigeria.
Image Credits: MyCover.ai
MyCover.ai provides an open insurance API that integrates with insurance companies, including Hygeia, Leadway, Sovereign Trust, AIICO Insurance and Allianz. The startup streamlines claims processes for these companies and end users, including fintechs, proptechs, e-commerce companies, telcos, logistics and mobility/ride-hailing, and BNPL platforms, which can choose from over 30 personalized insurance products to embed into their platforms. For instance, a third-party logistics platform can offer on-demand goods in transit coverage for goods moved on its fleet and provide riders with health insurance and personal accident coverage.
“We want our rails to make insurance mainstream, improve access and provide great products while using AI to power our claims management solution,” commented Banjo, referring to how MyCover.ai differs from other API-driven insurtechs, including Kenya’s Lami Technologies and Nigeria’s Curacel. “Also, at the end of the day, everything boils down to the experience people get. What we understand or see in the market is that people will be more aligned to personalized products than just getting any insurance product in the market. So what we are trying to do is to improve customers’ insurance experience and help launch personalized products based on lifestyles and specific nuances,” Igwe-Ifendu added on the call.
Only 0.5% of Nigeria’s population is covered, according to the National Insurance Commission (NAICOM). This means that most people in the country have never obtained insurance coverage and must rely on personal funds to save themselves in case of emergency. Individuals are left defenseless and trying to recover from negative circumstances, frequently plunging them into more poverty. This is why in addition to its API products, MyCover.ai has a B2B platform, MyCoverGenius, that offers entrepreneurs and small and micro businesses the avenue to purchase insurance products from the startup, thus covering their staff (i.e., access to antenatal care, eye and dental services) and assets, starting with $2 (~₦1,500) monthly.
MyCover.ai claims to have recorded over $1 million in gross written premiums from partnerships with 30 insurance providers nationwide since its launch. Banjo, who before launching MyCover.ai was the head of business development at MallforAfrica, also disclosed that the insurtech platform, which is in various stages of discussion with about 50 other providers in its pipeline, has processed over 50,000 policies while serving 30,000+ end users. The CEO added that the two-year-old insurtech doubled its revenue in 2022 from the previous year and intends to replicate the same growth by the end of this year.
Commenting on the investment, Dotun Olowoporoku, general partner at Ventures Platform, said, “Adebowale and his team are reshaping the insurance landscape in Nigeria and have their eyes set on the wider African market by building the much-needed insurance infrastructure on the continent. Unlike other insurtech solutions that focus on specific areas of insurance penetration among the underserved, MyCover.ai takes a collaborative approach and offers a suite of services that cover the entire spectrum of these challenges.”