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Microinsurance ready to disrupt African insurance industry

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Marius Botha, Group CEO of aYo Holdings (Source: aYo Holdings)

When it comes to insurance, there are few more exciting markets to be right now than Africa. Before COVID-19 struck, McKinsey predicted the African insurance market would grow at around 7% per year between 2020 and 2025. That’s nearly twice as fast as North America and three times faster than Europe.

The pandemic slowed that growth to some extent. But we’re still seeing significant innovation in the African insurance sector, where fintech insurers like aYo are using technology to reach previously underserviced markets across the continent, making microinsurance products available through mobile phone networks.

With the exception of South Africa, traditional retail insurance remains largely undeveloped on the continent. But Africa is a prime market for microinsurance, which is small, rapidly underwritten financial protection against a specific risk over a relatively short period of time – like hospital cover for accidents, for example.

Its growing popularity is giving millions of Africans access to life and hospital insurance for the first time. And while microinsurance started out largely being targeted at under-insured people, it’s only a matter of time before it moves up the value chain to disrupt the traditional insurance sector.

One of the biggest challenges facing the traditional insurance industry is to develop products that are suitable and accessible to people with lower incomes and younger generations with different needs. That’s why we’re increasingly going to see fintechs creating completely new kinds of insurance that will meet the dynamic needs of so-called millennial and GenZ audiences, disrupting the traditional model and increasing the user base of people insured in the process.

Right now, we’re seeing several trends combining to create a perfect storm of growth for the African insurance sector.

A surge in mobile coverage

The key to the growth of the microinsurance market on the continent has been the rapid expansion of mobile network providers, which provide the ideal delivery mechanism for the spread of the product. Insurance in the palm of your hand? It doesn’t get faster, more convenient, or easy to use than that.

A joint venture between telecommunications giant MTN and financial services group Momentum Metropolitan Holdings (MMH), aYo’s MTN connection has proven invaluable not only to drive access to markets, but to provide credibility and trust in the relatively new brand.

A growing digital economy

At the same time, we’ve seen Africa’s digital economy grow exponentially over the last year, largely driven by Covid-19. The pandemic has dramatically changed consumer behaviour, and consequently, how insurers interact with clients.

More than ever, consumers don’t want to sign paper forms, or stand in queues. They want to access their financial products quickly and easily from their mobile devices – and here, microinsurers have proven agile enough to deliver the right products through this channel. At the same time, technology is making it possible for higher levels of product customisation than ever, with the ability to meet a growing range of niche needs.

A vast under-insured population

Perhaps the most transformative aspect of microinsurance is that it protects those who need it the most. People with lower incomes need insurance even more than the middle class, because they are more vulnerable and have a smaller cushion of resources to draw upon in times of need. Having insurance shields users from the type of economic shocks that would otherwise have kept them locked into an endless cycle of poverty.

Mix together a boom in mobile coverage, a thriving digital economy and an underserved population, and the ingredients are in place for an insurance revolution. By providing insurance to millions of Africans for the first time, innovative fintechs and microinsurers are truly driving financial inclusion across Africa and making a tangibly positive difference to people’s lives.

Author: Marius Botha, Group CEO of aYo Holdings

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Banking / Insurance

Curacel unveils Grow, enabling any technology company to seamlessly offer insurance

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Curacel team (Image: Supplied)

Curacel, the leading African insurance infrastructure startup, has launched Curacel Grow. An embedded insurance product that empowers technology companies to seamlessly offer insurance as part of their existing products and services. The startup is also part of the Winter 2022 cohort of Silicon Valley’s prestigious Y Combinator accelerator, joining the growing list of successful African startups that have participated in and benefitted from the program.

Curacel is launching Grow to support more effective distribution of insurance to millions of Africans through partners like Barter by Flutterwave, Float, Payhippo and other leading technology companies. The startup will also enable seamless embedding of insurance in customer user journeys. With Curacel Grow, airlines will be able to offer travel insurance to their customers through simple APIs. Automotive dealers will also be able to seamlessly sell insurance to customers as a value-added service. Curacel has built its market leading infrastructure that powers claims and fraud protection for forward thinking insurers like AXA Mansard and Old Mutual. And this expansive network of underwriters enables the distribution of insurance at scale.

Insurance penetration in Africa currently stands at less than 3 percent, with most policies sold offline and manually via brokers and agents. This cumbersome process makes insurance products expensive and out of reach for many price-sensitive Africans. As a result, market penetration of insurance products in Africa is half of the global average and premiums per capita are 11 times lower than the global average. The insurance industry in Africa also represents less than one percent of insured catastrophe losses worldwide. Although it’s home to almost 17 percent of the global population. This suggests that there is significant scope for growth.

With Grow, insurers can accelerate the distribution of their products by taking advantage of Curacel’s technology to easily embed insurance within other digital experiences in a more accessible way. Technology companies can also increase their recurring revenue by offering the protection their consumers need without the hassle of finding integration and negotiating terms with insurers and brokers. The solution is designed to integrate seamlessly with any technology platform and Curacel’s AI-powered infrastructure means claims can be submitted and processed in real time.

Commenting on the new product, Henry Mascot, CEO and co-founder of Curacel, said, “risk protection is a major consideration for Africa’s growing middle class. As it becomes easier to access credit and other financial services to enable new experiences. We want to make it easier to protect these experiences and enjoy them with full confidence. The success of various technology companies over the years has opened the door to many previously underserved people. And we want to take advantage of this to accelerate the penetration of much needed insurance products across the continent.”

Curacel has a presence in 8 countries across Africa, enabling insurers to connect with digital distribution channels and administer their claims cost-effectively.

 

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Banking / Insurance

Microinsurance is driving greater financial inclusion, says aYo Ghana CEO

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There has been a ‘material increase’ in awareness of financial service products like microinsurance during 2021, with growing numbers of Ghanaian consumers purchasing cover to protect themselves and their families in the event of hospitalisation or loss of life.

Francis Gota, the CEO of microinsurer aYo Intermediaries Ghana Limited, says the company has seen a strong increase in its customer base since the start of the pandemic, with more than 6 million customers on its books at the beginning of November. It expects to add another 1.8 million customers in 2022. The company offers Hospitalisation and Life Insurance Cover through its two insurance products, ‘Send with Care’ and ‘Recharge with Care’.

In 2020, the company paid claims of about GH¢2.4 million to more than 8,000 customers.

“Microinsurance is dispelling the myth that insurance is just for the wealthy, educated, and formal-sector employees. Today, every Ghanaian consumer can purchase insurance on the go, using their mobile phones. Phone penetration and technological advancements are making it much easier to reach clients and provide better, more cost-effective service,” said Mr Gota.

Microinsurance is seen as a powerful enabler of financial inclusion in African markets, providing a much-needed social safety net that helps vulnerable people and particularly people with low incomes to stay afloat when the unexpected happens.

“Covid has made many people aware that tomorrow is not promised. As a result, many consumers have a better appreciation for insurance now, and this given us an opportunity to help protect more people than ever before, by providing cover against unexpected life events,” said Mr Gota.

Over 6 million subscribers are currently using aYo’s Recharge with Care product, which offers life and hospital insurance cover every time customers recharge their MTN airtime. Customers can get up to GH¢120 for each night they are admitted to hospital, and up to GH¢6,000 life cover for themselves and one family member who is registered on the policy.

How to sign up

For Recharge with Care, subscribers sign up via app.ayo4u.com or by dialling *296#, selecting option 1 and following the prompts. They can sign up for MyLife, MyHospital, or both. A maximum premium of GH¢6.00 provides cover that is valid for 30 days. Subscribers use the same process for filing claims (*296#, option 1, option 7, and follow the prompts.) Valid claims are paid directly to the claimant’s mobile money wallet.

MTN MoMo subscribers can send MoMo through aYo Send with Care by dialling *170#, select option 1 (transfer money) and then option 3 (Send with Care) on the mobile money menu. This will give them up to GH¢30,000.00 hospital and life insurance cover for themselves, and up to GH¢3,000.00 life cover for their family members (the receivers of the MoMo).

 

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Banking / Insurance

aYo partners with MTN to launch insurance for all Ivorians

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Panel Guests: From the left: Laurent Koffi Senior Manager Segments Mobile Financial Service of MTN Cote d’lvoire; Jean-Charles N’Gotta CEO of aYo Cote d’lvoire; Marius Botha Group CEO of aYo Holdings; Philippe Attobra CEO of Sanlam Assurance Vie (Image: Karli Stock)

aYo Holdings, African microinsurance fintech together with telecommunications giant MTN and Sanlam Life has launched two innovative insurance products in Côte d’Ivoire that will contribute towards MTN subscribers enjoying peace of mind.

CEO of aYo Intermediaries Cote d’Ivoire Limited, Jean-Charles N’Gotta, said: “It is estimated that less than 2% of the Ivorian population currently has insurance. This is because most people think insurance is only for white collar workers with high incomes. We want to show that with aYo services, people with all levels of income can get peace of mind at an affordable cost to help take care of their financial health even after hospital bills due to an accident or illness, or their funeral expenses if the unforeseen happens and they pass away.”

Two basic products will be available at launch once consumers sign up to aYo:

aYo Recharge+ rewards MTN MoMo (Mobile Money) users by offering free accidental hospitalisation cover and life cover each time customers purchase airtime via MoMo. Customers can also take advantage of the AutoBoost, paid-for, functionality to get even more cover with every MTN airtime recharge.

With the free component of aYo Recharge+, each time a customer uses their MoMo wallet to recharge airtime, they get 8 times that amount as accident cover and 12 times that amount as life cover. When they take advantage of AutoBoost to buy additional cover (from 25 CFA to 300 CFA), this amount is multiplied by 200 for additional accident hospitalisation cover and by 300 for additional life cover.

aYo Kash+ offers cover for illness and accidental hospitalisations as well as life cover each time a consumer sends money, pays utility bills or school fees via MTN MoMo. Each time a customer makes a person-to-person money transfer or pays a bill using MTN MoMo, they get illness cover equal to the amount they spend in that transaction, accident and life covers for three times the amount transacted by paying a 5% premium. When they pay school fees using MTN MoMo, they get life cover for twice the amount transacted by paying a 2% premium.

Getting cover and claiming is as easy as using the aYo progressive web app from your mobile phone by visiting www.ayo.co.ci. Signing up, interacting, and claiming all happens without the need for any physical paperwork. When claiming, the required documents can be attached and sent via WhatsApp too.

aYo launched in January 2017 in Uganda and has reached more than 14 million customers across Uganda, Ghana and Zambia. The company has paid in excess of over $1 million in claims.

“Insurance, and the peace of mind it provides, has become more important than ever in today’s fast-paced world, where risks are a part of our daily lives. You never know when you will have to pay to get back on your feet after an accident or an illness. Often, the cost is so large that it goes beyond your immediate financial capacity, and that is where aYo and our innovative products will be most helpful,” said Jean-Charles N’Gotta.

 

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