Africa's Insurance Landscape and Lami Technologies' Innovation

A 2018 McKinsey study reveals that insurance penetration across Africa stands at just 3%, when examining six insurance regions on the continent. Removing the South African market from this calculation results in a significantly lower figure of 1.12%.

Addressing the Gap in Tailored Insurance

Many African insurance companies haven't prioritized the development of insurance products that are both affordable and specifically designed for the average African consumer. Lami Technologies, a Kenyan startup, secured $1.8 million in seed funding to address this critical need.

Seed Funding and Key Investors

The investment round was spearheaded by Accion Venture Lab, a seed-stage firm focused on financial services for underserved markets. Additional investors included AAIC, Consonance, P1 Ventures, Acuity Ventures, The Continent Venture Partners, and Future Africa.

Traditional Distribution Challenges

The limited uptake of insurance in Africa is partly attributable to conventional distribution methods. These methods typically rely on physical branches for sales and policy processing, leading to lengthy turnaround times, reduced customer satisfaction, and increased distribution expenses.

Premium Payments and Market Size Disparities

The method of premium payment is also impacted by these traditional systems. According to the 2018 McKinsey report, the total gross written premiums (GWP) in Eastern Africa amounted to $3.3 billion. In contrast, South Africa generated $48.3 billion in GWP during the same period.

Lami's Mission: Democratizing Insurance

Jihan Abass founded Lami in 2018 with the goal of making insurance products more accessible throughout Kenya.

Understanding Low Insurance Adoption

“Our primary focus was understanding why 97% of Africans do not purchase insurance,” Abass explained to TechCrunch. “We investigated the reasons, particularly in Kenya, where over 50 insurance companies operate, yet penetration remains at only 2.4%.”

Building Technological Infrastructure for Wider Access

“Our core objective was to make insurance broadly available. We believed that constructing the necessary technological infrastructure to facilitate insurance distribution was the most effective way to increase penetration rates across Africa,” she added.

A B2B2C Approach to Building Trust

Selling insurance directly to consumers presents challenges, as trust in third-party companies is often limited. Therefore, Lami adopted a B2B2C strategy, leveraging the established trust of platforms that already interact with customers daily.

API Integration for Seamless Insurance Offerings

Through its API, Lami enables businesses – including banks, startups, and organizations – to offer digital insurance products to their users. The API also allows partner businesses to manage their own insurance requirements.

Strategic Partnerships and Marketplace Expansion

Companies like Stanbic Bank in Kenya utilize Lami’s API for insurance operations, and HR platform WorkPay provides insurance products to businesses on its platform. Lami is also launching an insurance marketplace on the e-commerce platform Jumia, with over 20 insurance writers participating.

Customizable Insurance Products and Claims Processing

Users can obtain quotes for motor, medical, and other customized insurance products via the API. They can tailor benefits, adjust premiums, receive policy documents, and file claims.

Accelerated Claims Resolution

Traditional African insurers typically require around 90 days to process claims. Lami has significantly reduced this timeframe to just one week, fostering greater customer trust.

Overcoming Challenges in Onboarding Insurance Companies

A key challenge was convincing insurance companies to adopt digital distribution channels. Abass explained that demonstrating the value of improved customer experience and journey – delivering the right insurance to the right customer at the right time – was crucial.

Co-Designing Products for Unique Offerings

Lami differentiates itself by co-designing products with its underwriting partners. This collaborative approach enables businesses to offer unique insurance products tailored to their customer base.

Innovative Insurance Models

As an example, Abass described an offering with a bus-booking platform where passenger insurance is calculated on a per-trip basis, activating upon boarding and ceasing upon alighting. She believes such innovation will propel the continent’s insurance sector forward.

The Potential of the African Insurance Market

“I believe there is substantial potential within the insurance industry. Despite the low penetration rate, the annual market is valued at over $60 billion. People are increasingly recognizing the importance of insurance compared to other financial services,” Abass stated.

Growth and Partnerships

Since its launch, the insurtech startup has sold over 5,000 policies and partnered with more than 25 active underwriters, including Britam, Pioneer, and Madison Insurance. These partners distribute over 30 products, ranging from medical and employee benefits to motor and device insurance.

Future Plans and Investment Allocation

Lami will utilize the seed investment to expand its team, enhance its technology, and broaden its presence across Africa.

Accion Venture Lab's Perspective

Accion Venture Lab’s African director, Ashley Lewis, commented on the investment: “By embedding customized insurance within businesses that customers know and trust, Lami is making insurance accessible for underserved populations in Africa and enabling them to build financial resilience.”

Breaking Barriers for Female Founders

Lami’s investment also signifies a positive trend in the Kenyan tech ecosystem, where indigenous and female founders are often underrepresented. A 2019 study indicated that Kenya had the highest proportion of expat co-founders among the Big Four tech hubs.

Addressing Gender Imbalance in Funding

While Kenya has a relatively better representation of female co-founders compared to other nations (1 in 4), the percentage of Kenyan-born female founders is around 12%.

Pioneering Female Leadership

Few female founders have secured million-dollar funding rounds. Abass is among this select group, and she acknowledges the resilience and confidence required to achieve this success.

Advocating for Greater Inclusion

“The funding landscape in Kenya tends to favor male founders and, in East Africa, particularly foreign founders. Securing investor interest and buy-in was more challenging for us. We’ve built something truly exciting, though it took time. Publicizing this achievement is important to inspire other female founders to pursue similar opportunities,” she concluded.