Kenya’s Insurance sector is set to face disruption following the launch of a new InsurTech ecosystem seeking to create new solutions to the ailing insurance sector.
Over 60 InsurTech start-ups pitched to investors at the inaugural two day Africa 3.0 conference held in Nairobi, as they seek to partner in increasing insurance penetration in the region.
The conference, which is organised by Market Minds in partnership with Evolution East Africa and the UK Department for International Trade, has also seen over 150 start-ups from Africa participate.
Market Minds founder Sebastian De Zulueta says a number of deals are expected to be signed with over 30 venture capitalists keen to tap into the opportunities in the insurance market in Kenya and Africa at large.
“East Africa’s mobile penetration gives great opportunities for disruptions in the insurance sector. We just need to begin the conversation, following the pitching and we will work to see the connections are maintained and the deals are signed,” Zulueta said.
UK High Commissioner Nic Hailey expressed his country’s commitment to supporting the ecosystem in Africa.
“I am pleased we are launching the InsurTech conference in Africa here in Nairobi. The UK is home to a huge depth of expertise across Insurance and one of the fastest growing tech centre in the world. We are working with Kenya and other African countries to promote more partnerships between Tech and Insurance Companies to help ensure more people are able to access insurance,” Hailey noted.
According to a new report released by the BaoBab Network, Africa’s InsurTech space is worth $60 billion but remains largely untapped.
“Of all funding that goes to start-ups in insurtech globally only 2 per cent goes to Africa. This presents huge opportunities for investors and tech start-ups to benefit even as they provide the urgently needed solution in the insurance sector,” said Toby Hanington CEO and Founder, Baobab Network.
He however urged both local and international investors to develop innovations that suit the African market.
“There is need for more research to find out what the local insurance market needs,” he added.
Some of the challenges facing the insurance sector include poor information, low insurance uptake and high cost of premiums that has locked many from accessing insurance.
Investment in the insurTech reached $972 million globally in 2018 with a five year compound annual growth rate of 45 percent. However, the share of disclosed funding going towards Africa InsureTech start-ups reduced from 0.6 percent in 2017 to 0.2 percent in 2018.
The current insurance penetration in Africa stands at 3.5 percent with South Africa leading the continent with a penetration of 17 percent against a global average of 6.28 percent.
Kenya’s penetration is currently at a staggering 2.93 percent, leading the East African pack followed by Rwanda at 1.74 percent and Tanzania at 0.68 percent.
East Africa Insurance Industry has been traditionally focused on the established markets such as life insurance and mining and oil where returns are greater.
InsurTech companies and startups have an opportunity to tap into the underserved population.
The World Bank estimates that African agriculture premiums account for approximately $200 million in 2017, less than one percent of $25 billion agriculture premiums globally.