Africa appears to have one of the largest underdeveloped insurance sectors on the globe and this alone positions it as the second fastest-growing continent for insurance with just Latin America ahead of it.
Before COVID-19 struck, the African insurance market was expected to have grown at a compound annual rate between 2020 and 2025 at 7 percent per annum.
However, the advent of the pandemic has appeared to have dampened the penetration of insurance around the continent especially for its large underserved population.
Therefore, bringing insurance to the people while leveraging technology is an effective way to ensure penetration across the continent.
One platform that has identified this need is Lami Technologies an insurtech startup based in Kenya
Founded by Jihan Abass in mid-2018 with the vision of breaking the 3% insurance penetration barrier in Africa, the founder was inspired by providing a safety net for the developing world, especially on the African continent.
While she was growing up in Kenya, seeing families struggle due to unexpected illnesses and accidents, or due to natural catastrophes resulting in substantial damages was a common sight in Kenya.
On becoming aware of the continent’s lack of safety net for millions of people, Jihan began her journey of democratizing insurance.
She assembled a diverse team with decades of combined experience in insurance, technology and entrepreneurship with the goal of democratizing insurance through digitization and technology. And that’s how Lami Technologies was born.
“We are revolutionizing insurance by giving customers access to products that work for them in their daily lives.
Our technology helps lower insurance distribution costs and reduce premiums, while reaching a much larger portion of the African population.”
An overview of insurance in Africa
Across the African continent, insurance penetration rates remain extremely low, leaving many vulnerable to financial stress due to unexpected emergencies.
For instance, across Africa, the penetration of insurance is less than 3% and one of the reasons for such low penetration is that current products and offerings are not tailored to customers’ needs and users do not derive much value from them.
“Traditional insurance products lack flexibility, are not affordable and are not accessible. Insurance has yet to catch up with other financial innovations and offer a seamless experience.”
In light of this financial literacy and education about insurance remain a challenge in Africa.
“Many people have never interacted with insurance before. It is therefore important that insurance projects, whether digital or traditional, are supported with substantial educational effort for the target population.”
According to the founder, Lami’s aim is to reach 50 million customers by 2025 through the Lami API and underwrite over $1 billion in GWP.
“Lami will play a central role in providing a safety net for Africa’s population by using technology to deliver flexible insurance products anywhere and to anyone.”
How Lami works
To get an overview of how Lami works here is a step by step process of how the insurtech platform carries out its operations
- Lami works with business partners to develop insurance products that meet their needs or the needs of its customers.
- The business partner orders digital insurance policies, via web portals or APIs.
- Customers share claim details in-app in real time with underwriters and get settlement in record times.
- Partners can monitor and manage the digital insurance operation through dedicated dashboards.
- Lami collaborates with partners to ensure success in all aspects of the project.
According to its website, Lami’s API gives users access to the entire insurance ecosystem through:
Real time underwriting
Paperless underwriting drives customer acquisition.
Big data and social physics
Big data drives up-selling and cross-selling.
Dynamic pricing
Custom pricing based on customer profiles and behaviour.
Service provider network
Coordinated service providers offer a seamless customer experience.
Intelligent claims processing
AI enabled claims to speed up processing times and detect fraud.
Rewards and loyalty
Proprietary reward system increases engagement and loyalty.
On what Lami is doing differently, Youssef said that the insurtech startup enables partners to digitize their insurance operations on the go.
Lami offers users an end-to-end digital insurance platform and ecosystem that enables companies across sectors to easily offer and manage insurance products to their users, through a seamless digital experience.
The Lami platform offers various insurance services via its API allowing underwriters to connect with consumer-facing companies to provide embedded insurance as a value add for existing customers, many of whom are uninsured.
“Our platform API enables you to automate underwriting, reduce claim ratios, increase profitability.”
Encouraging insurance culture in Africa
“By offering products that are truly solving a problem and have a compelling value proposition.”
The founder said that this is essentially the result of iterative and continuous user research that uncovers needs and discovers opportunities to inform product design and development.
“By building trust with customers, especially by fulfilling the promise is key to adoption of insurance products.”
Explaining further she said that an insurance policy is simply a promise and if not fulfilled, then trust is broken, this will negatively affect product adoption.
“If customers’ expectations are met in case of a claim, then this will create a positive experience and will reinforce its reputation and the adoption of the product.”
By educating customers on the benefits of financial planning and risk mitigation. Insurance is a complex product that is not widely used, and therefore there’s little understanding of insurance.
Insurers need to allocate a considerable amount of time and effort to educate customers about the value they can expect from purchasing a policy.
Lami’s journey
Despite 2020 being a pandemic ridden year, it didn’t deter the insurtech startup from scaling some heights.
In the beginning of 2020, Lami launched the first digital motor insurance app in East Africa and before the lockdown in the following month, the startup launched another digital motor insurance app dedicated to PSVs.
During the lockdown around April, Lami powered the insurance marketplace in the JumiaPay App and in the following month it insured mobile phone credit default risk.
In July, one of the top banks in East Africa onboarded with the startup to use its platform to digitize bancassurance. In November the same year, Lami insured assest financed medical devices against loss, theft and damage.
By the close of the year, the Startup provided medical insurance to WorkPay’s professional users in the country.
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