The insurance market of Africa is expected to grow at a compound annual growth rate (CAGR) of 7% between 2022 and 2028, to $120 billion. While seemingly impressive, the insurance industry in Africa could be worth more if insurance penetration in the continent were not extremely low, below 3%, according to reports. As a result, traditional insurers have a finite market to sell their products, which in most cases are substandard by global standards.
Nevertheless, with a growing young population, increasing smartphone usage, cheaper internet access and the proliferation of fintech apps, the underwriting market is taking shape as startups launch solutions for different customer segments trying to deepen penetration. One solution from Nigeria, MyCover.aiannounces 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 own technology and strategically expand its business into other African markets.
“We want to have a significant share in a market with an insurance penetration of less than 1%. As we do that, we want to expand into other African markets and into other emerging markets, and eventually the rest of the world, as we believe our solution has global applicability,” co-founder and CEO Adebowale banjo told JS during a call.
Banjo co-founded MyCover.ai with CPO, which provides an open insurance API that allows companies to integrate insurance into their existing products and services Alexander Igwe Ifendu and CTO Fred Ebo in 2021. MyCover.ai plans to address several pain points in the African insurance market. First, insurers operate in silos. As a result, there is a lack of understanding of what to optimize for consumers, leading to a lack of access on the part of the customer – and for those who have access, they pay premiums. In summary, the main challenges of the market are a lack of access, insufficient coverage, the unaffordability of insurance products and the poor customer experience around insurance processes.
“There’s a problem with access and distribution as a whole, especially with the kinds of products that insurance companies were putting out and what people needed and could afford,” said Banjo, explaining why MyCover.ai was built. “We also found that the handshake between insurance companies is not there, the visibility and data needed to gradually improve products and insurance were missing.”
Initially, the founders built a comparison site, where they pit insurers against each other. But after further market research, they turned to an infrastructural game that operates on three essential touchpoints: underwriting and product development, distribution and insurance claims. They believed this would quickly boost insurance adoption and growth in Nigeria.
Image Credits: MyCover.ai
MyCover.ai offers 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, who can choose from over 30 personalized insurance products to integrate into their platforms. For example, a third-party logistics platform might provide on-demand goods-in-transit coverage for goods moving on its fleet and provide riders with health insurance and personal accident coverage.
“We want our rails to mainstream insurance, improve access and provide great products while using AI to power our claims management solution,” said Banjo, referring to how MyCover.ai differs from other API-driven insurance techs, including Lami Technologies in Kenya and Nigeria’s Curacel. “Besides, everything ultimately comes down to the experience people gain. What we understand or see in the market is that people will be more inclined to buy personalized products than just any insurance product on the market. So what we’re trying to do is improve the insurance experience for customers and help launch personalized products based on lifestyles and specific nuances,” Igwe-Ifendu added to the call.
According to the National Insurance Commission (NAICOM), only 0.5% of Nigeria’s population is covered. This means that most people in the country have never received insurance coverage and must rely on personal resources to save themselves in an emergency. Individuals are left defenseless and try to recover from negative circumstances, often pushing them into further poverty. Therefore, in addition to its API products, MyCover.ai has a B2B platform, MyCoverGenius, which offers entrepreneurs and small and micro-enterprises the opportunity to purchase insurance products from the start, covering their workforce (i.e. access to antenatal care, eye – and dental services) and assets, starting at $2 (~₦1,500) per month.
MyCover.ai claims to have recorded more than $1 million in gross premiums written from partnerships with 30 insurance companies across the country since its launch. Banjo, who was head of business development at MallforAfrica prior to the launch of MyCover.ai, also disclosed that the insurtech platform, which is in various stages of discussions with about 50 other providers in its pipeline, has processed more than 50,000 policies and more than 30,000 users. The CEO added that the two-year-old insurtech doubled its revenue in 2022 from the previous year and plans to repeat 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 turning their sights to the broader African market by building much-needed insurance infrastructure on the continent. Unlike other insurtech solutions that target specific areas of underserved insurance penetration, MyCover.ai takes a collaborative approach and offers a range of services that cover the entire spectrum of these challenges.”
