InsurTechs shaping Nigeria’s N2.33trn insurance market

By Alexander Chiejina 

• Leverages AI for risk and demand modelling, 
• Fraud detection, claims processing, and lots more.

Even while these changes can initially be accompanied by fear and doubt, innovation through new technology is a fundamental driver of change in the financial sector and this has led to incalculable efficiency improvements. The insurance industry is no exception to this, as technological advancements have opened the possibility of new service delivery methods and increased data collection opportunities have given rise to the “Insurtech” industry, which is a significant influence on the structure of financial services in sub-Saharan Africa and is proving to be a key enabler of boosting financial inclusion.

According to the Statistics Department Quarterly Report of the National Insurance Commission (NAICOM), the total assets of the Nigerian insurance industry stood at N2.33 trillion in the fourth quarter of 2022. This has not changed much over the years, largely because of a risk-averse culture that has been resistant to change. This is furthered by Nigerians’ lack of interest in purchasing insurance plans. Insurance penetration in Nigeria is less than 1%, and stakeholders in the business claim that it has continued to expand slowly when compared to South Africa and Kenya.

The entry of insurtech is seen as a chance to form alliances and mobile strategies aimed at adding value in this increasingly digital financial ecosystem, where general bad customer experience and lack of trust are evident. This is largely because new technologies have the potential to have a significant impact on the insurance industry, are less expensive to develop and maintain than existing legacy systems and have lower entry barriers than incumbent legacy systems.

But this trajectory is going to alter with the introduction of insurtech, a technology that powers the development, distribution, and management of the insurance industry, upending the confidence of both investors and insured parties.

Peer-to-peer (P2P), on-demand, and index insurance are among the most well-liked goods and services provided by insurtechs, according to a recent Deloitte survey. In addition, usage-based products like vehicle insurance, gig economy, fleet-based enterprises, and agribusiness have a strong attraction to many clients in Africa. Additionally, insurtechs provide microinsurance, or inclusive insurance, targeted at low-income individuals against specific risks in exchange for recurring monthly payments that, in the end, equal the cost of the risk at hand.

Casmir Azubuike, the chief executive officer of Afriglobal Insurance Brokers Limited, in a paper titled, ‘Changing the Face of Insurance Practice’, stated that “The Nigerian insurance industry is evolving from analogue to a digitally driven industry. Office processes are getting automated, manual registers and records are being phased out, policy and clients’ statistics are now being spooled electronically, and policy documents are being generated and transmitted electronically. The latest is the development of the mobile app, which makes it possible for you to buy insurance from start to finish, including claims reporting and processing, on your mobile phone, from the comfort of your bedroom.”

Players in Nigeria’s InsurTech market

Izana Africa 

Izanu Africa is an agri-insurTech firm that provides solutions to agricultural risk by leveraging technological tools to democratise access to agricultural solutions and resources including microinsurance in emerging and frontier markets. Izana Africa bundles fit-for-purpose warranty policies for farmers especially those at the bottom of the pyramid to increase their resilience to anthropogenic, naturally occurring incidents and increase the livelihood of smallholders as it is believed that access to inclusive and climate-resilient warranty policies by these farmers in Africa especially Nigeria will guarantee food security, strengthen their livelihoods, and bolster relationships with input dealers and producers.

Izanu’s products include crop warranty which covers smallholder farmers from financial and production losses for various reasons, machinery warranty which provides cover for insured machinery against sudden and unforeseen physical loss/damage, livestock warranty designed to protect livestock from unexpected and goods in transit to protect farmers who transport goods from one site to another against financial loss during transit.

Paddy Cover

Paddy Cover is a pay-as-you-go insurtech that embeds insurance products into your lifestyle and enables you to have the flexibility of payment. With a mission to harness the power of technology and strategic partnerships in creating and effectively distributing impactful insurance products to those most in need of it, the insurtech focuses on adopting and distributing key insurance products like life and health and wellbeing insurance, amongst others, as a means of building a model of prevention towards risk in addition to strengthening resilience.

PaddyCover works with established insurers and customer aggregators to design and offer bespoke products via a multi-channel platform that facilitates flexible and convenient payment for insurance packages.

Curacel

Curacel is an AI-powered platform for claims processing and fraud management. Curacel automates the insurance claims process, allowing staff to process claims volumes quickly and efficiently, and automatically vets claims to detect fraud, waste, and abuse. Curacel creates APIs that enable insurers to connect with digital distribution channels and administer their claims cost-effectively. The company is building the rails to make insurance work for the next billion Africans and empowering businesses everywhere with the technology to embed insurance for their users.

SL DRA

SL DRA is an insurance data repository and service for the insurance industry, with a primary focus on emerging economies. Using advanced technologies to collect and analyse millions of records, SL DRA draws on unique domain expertise to provide innovative solutions. SL DRA offers analytics and decision support solutions to members in rate making, underwriting, claims, catastrophe, and weather risks. 

The firm assists people to make better decisions about risk, investments, and operations with greater precision, efficiency, and discipline. Around the world, the company assists members to protect people, property, and financial assets. It has specialised and in-depth knowledge in defined vertical markets such as insurance, risk management, predictive analytics, and software engineering.

Insurpass

It is an insurance firm that is keen on deepening insurance penetration in Africa by working together with insurance companies and other businesses across various sectors to democratise access to affordable and innovative insurance products for underserved customers who are mostly left out of insurance coverage. As an API- based insurance technology company, its mission is to increase insurance penetration across Africa while delivering a seamless digital insurance experience to customers.

Inarguably, the insurance sector is key to Africa’s development. This is projected to be more profitable with the adoption of insurtech, as a key component of the fourth industrial revolution. Insurance is an important way to protect your financial future, it’s paramount for all Africans to be insured. Given that the new generation demands new and more personalized products, insurtech caters to this need, which is also shared by SMEs, as they require more insurance options; by inculcating artificial intelligence which analyses data, making former models keep developing and combining them with new products.