Here are seven SA insurtechs that insurance companies are working with

Insurance technology is big money in South Africa, with several local insurtechs having together raised tens of millions of rands in investment of late, to develop new models that aim to disrupt the traditional insurance industry.

Wins by three SA insurtech startups — Pineapple, InvestSure and Naked — in three respective business competitions, in the last month, says something about the level of insurtech in South Africa.

A report by South Africa’s Centre for Financial Inclusion (Cenfri) in September backs this up. It reveals that when it comes to emerging markets, India, South Africa and Brazil are front runners — with 51 insurtech initiatives in South Africa, 51 in India and 43 in Brazil.

Just like fintech, where SA banks are working with several local fintech startups (see this story), insurtech is proving a big money spinner too.

Last week, Momentum Metropolitan revealed that it is partnering with local venture capital (VC) company 4Di Capital and a VC from the UK to develop innovative financial products and services (see this story).

SA insurtechs have raised tens of millions of rands to develop disruptive insurance models

Meanwhile, Constantia Insurance‘s CEO Volker von Widdern told Ventureburn last week that the company had stopped underwriting insurtech Fo-Sho in October last year because the startup’s model had not proven viable. The startup is one of three firms that Constantia has partnered with to introduce new insurance models (see this story).

Despite this set back the industry looks to be flourishing.

A number of local insurance companies are working with startups. Ventureburn has listed four such companies — Hollard, Old Mutual, Compass Insure and GuardRisk and the respective startup they’re working with.

Old Mutual

Old Mutual is working with Simply Financial Services through its Old Mutual Alternative Risk Transfer (OMART) product (see this story).

Explained Simply CEO Anthony Miller to Ventureburn in March last year (see this story): “Under this arrangement, we essentially develop and sell products on the OMART insurance license. OMART underwrites Simply products, which means they are the insurer with whom our clients are contracted, and they are responsible for paying claims”.

The insurtech — which Miller launched in 2015 with two actuaries Simon Nicholson and Shaun Dippnall — also works in partnership with Reinsurance Group of America (RGA), which acts as Simply’s reinsurers.

“So, while claims are paid by OMART, part of the premium is passed on to RGA, and they then cover a significant portion of the cost of claims when they arise,” he explains.

In March last year Miller told Ventureburn some of its customers are cautious about signing up with a “little-known brand,” he adds, saying the startup’s partnership with OMART is “very helpful here”.

Miller told Ventureburn this week that Simply has sold 16 843 (which cover 56 015 dependent and policyholders) worth over R10.9-million. This has grown from 5920 policies worth over R3-billion in cover, as of March 2018.

Since launching, the company has raised R40-million in capital. The startup was largely self-funded, before securing investment in 2016 from SA insurance company Lomhold and two other private investors.

Its last round was announced in October last year in which the startup secured what it said was a deal worth “tens of millions of rands” from Yellowwoods (see this story).

Old Mutual has also underwritten Johannesburg-based Yalu which claims it will offer South Africans “more affordable and transparent” credit life insurance. The startup was founded in 2017 by two former Old Mutual managers, Nkazi Sokhulu and Tlalane Ntuli.

The black-owned startup in May last year announced that it had received investment from the Public Investment Corporation (PIC) — which oversees government employees’ pensions. The PIC, which has a 10.5% stake in Old Mutual, has taken a 30% stake in the startup.

At the time Sokhulu said while both he and Ntuli have worked for Old Mutual in the past and while Yalu’s policies are underwritten by Old Mutual, the startup has not received any funding from the financial services provider. Both Old Mutual and insurer RGA helped out with licensing requirements.

In September the startup revealed that it is raising a Series-A round, to expand its product capability, grow distribution reach and build more operational capacity (see this story).

Compass Insure

Johannesburg-based insurtech startup Pineapple is underwritten by Compass Insure. Last month the startup won first prize and $1.5-million (R22-million) in VentureClash, a $5-million global venture challenge for early-stage companies, run by US-based Connecticut Innovations.

This, as the startup also revealed that it had carried out a funding round of over R5-million earlier this year, with a bridging round of funding from the Association for Savings and Investment SA (Asisa) Enterprise Supplier Development (ESD) Fund (see this story).

Pineapple was founded in 2017 by Matthew Elan Smith, Ndabenhle Junior Ngulube and Marnus van Heerden. The startup’s app allows users to insure anything from cellphones to bicycles in the snap of a picture.

At the time Elan Smith declined to disclose how much the round was for, but confirmed that it was higher than the R5.2-million in seed funding the startup secured from Lireas Holdings, the strategic investment arm of Hannover-Re Group Africa, in 2017 (see this story).

Elan Smith said the startup currently has 12 employees and is looking to make about three more hires by the first quarter of next year. He said last month that the startup is in “late-stage” discussions with a US partner.

Compass Insure is also underwriting another Johannesburg-based insurtech startup, InvestSure. Last month the startup revealed that it had been included on the Insurtech100 2019 list (see this story).

InvestSure has created what it claims is a world first — insurance that protects innocent shareholders from loss caused by allegations of management fraud and dishonesty of Johannesburg Stock Exchange (JSE) listed companies.

The startup’s service is currently available on the EasyEquities platform and the startup said in a statement yesterday that it is working on integrations with multiple investment platforms in South Africa. It also plans to roll out the product to all investors in South Africa in December.

The startup was founded in 2017 by Ignatious Nkwinika, Shane Curran and Mbulelo Mpofana.

In March, InvestSure announced that the company has completed their first funding round – securing R9.6-million from Hannover Re Africa subsidiaries Lireas Holdings and Compass Insure, and venture capital firm 4Di Capital (see this story).

The funding announcement follows two years of incubation that the startup received from Compass Insure.

Hollard

Hollard has invested tens of millions of rands in SA insurtech startup Naked.

The insurance company, together with private investment group Yellowwoods announced an investment of R30-million in the startup in December last year (see this story).

It follows R20-million the insurtech received from the two investors in 2017 (read more here) when it launched its first offering, an artificial intelligence (AI) based car insurance offering, in the same year.

Naked, which was last month named the overall winner of MTN App competition (see this story), claims that it is different from other insurance providers.

It says unlike existing insurance, it takes a fixed portion of premiums to run the business, with the balance going into a pool to cover claims.

At the end of each year, money left over in the claims pool goes to charities nominated by customers rather than towards company profits, meaning Naked’s income doesn’t depend on whether claims are paid or not.

The startup was founded by actuaries Alex Thomson, Sumarié Greybe and Ernest North in 2016.

Guardrisk

Cape Town based insurtech startup Nobuntu — which announced in April that it had raised an undisclosed amount in investment from Blue Garnet Ventures to develop and launch its flagship savings product (see this story) — and another Cape Town based company, digital insurance platform Click2Sure, are both underwritten by Guardrisk.

Nobuntu was founded in 2017 by CEO Tyron Fouche, CFO Reka Borole and COO Ross Tasker.

The insurtech’s current offerings include a funeral cover and its flagship peer-to peer pension savings product called The People’s Fund that provides greater returns to customers the longer they live.

This, while Click2Sure which was founded in 2016 by Daniel Guasco and Jacques van Niekerk announced in October last year that it had secured an undisclosed amount in investment from Greenlight Capital Re, a Cayman Islands based reinsurance company (see this story).

Click2Sure’s digital insurance platform which enables retailers, service providers, distributors and brokers to offer a selection of over 20 custom developed insurance products at the point of sale.

Read more: Here are eight SA fintechs that local banks are working with [Updated]
Read more: Seven SA insurtech startups to watch [Digital All Stars]