We recently invested in Lami, an insurtech startup which embeds insurance into existing digital infrastructure to increase insurance penetration across Africa.
Insurance market penetration remains low in Africa at less than 3% in 2019, with GWP per capita 11 times lower than the world average. This is despite the increasing financial inclusion levels being driven by larger mobile penetration and payments. Traditional insurance faces several challenges in the African market specifically:
- a lack of effective distribution
- reliance on inefficient manual processes and operations
- a lack of trust by individuals in insurers, and
- unsuitable product offerings for African individuals.
Lami solves these challenges by digitizing the interfaces between insurance underwriters and businesses, effectively building the technology infrastructure for insurance that can be tailored to the African population. Using Lami’s simple API, businesses can embed adaptable insurance products into their own digital networks so their customers and suppliers can seamlessly access insurance that is tailored to their needs.
Lami has recently acquired Bluewave Insurance and is exploring ways to help existing players within the insurance ecosystem distribute their products more efficiently by utilizing technology to streamline their operations and make it easier to onboard customers, with self-service insurance dashboards and chatbots for customer service.
Lami works with 25 underwriters to build insurance products that are adaptable and suited to the African consumer. Lami embeds these insurance products into existing digital networks with a single API, enabling institutions like banks or third-party logistics providers (3LPs) to offer digital insurance tailored to their customer’s needs. Lami has integrated its API with more than 15 entities in various sectors including logistics, eCommerce, banking and fintech.
Newtown Partners, through the Imperial Venture Fund, invested a significant amount of Lami’s $3.7M seed extension led by Harlem Capital. Lami aims to use this capital to deepen its product offering and expand into new markets, with Nigeria and Egypt being the primary focus given their large growing and tech-savvy populations. This investment is aligned with our digitizing healthcare interfaces/healthcare funding & financing thesis done for the Imperial Venture Fund.
The IFC estimates that despite 51% of the African population having insurable risk, only 1% claim from insurance, as typically consumers in Africa do not trust that insurance adds value. Consumers that have paid for insurance have faced long processing times for claims settlement which often results in the claims being denied or partially paid. As such customer education is required to drive insurance penetration but because of the analog distribution models available, providing high-quality education at an affordable cost is difficult. Lami’s API which embeds into existing digital infrastructure, makes insurance an invisible value add, and each time a claim is processed efficiently Lami is changing the mind of the end-consumer. This makes the insurtech startup’s solutions highly scalable in the African market.
Jihan and the Lami team have taken their time to understand the varied consumer and business needs in each market they operate in. As such they have built and monetized insurance products that are viewed by their partners as differentiators and value-adds to attract customers and retain suppliers. All while educating a very distrustful consumer base.
The Lami team are impressive executors, who have the vision to change this outdated insurance industry by utilizing technology to make insurance accessible, affordable and contextualized for the African market.