Lami Technologies, Kenyan insure-tech start-up, has received Ksh. 192,330,000 ($1.8 million) in seed money, to help provide tailored and affordable insurance products to the average African consumer. Lami also stated that it intends to use the seed investment to hire more people, improve its technology and grow its presence across Africa.
The investment round was led by Accion Venture Lab, a seed-stage investment firm that supports financial services targeted at underserved markets. Other VCs that participated include AAIC, Consonance, P1 Ventures, Acuity Ventures, The Continent Venture Partners and Future Africa.
Low insurance uptake in Africa has been attributed to the traditional distribution of insurance policies. These seemingly outdated processes take a longer processing cycle, resulting in poor customer satisfaction and higher distribution costs.
A 2018 McKinsey report unveiled that the total gross written premiums (GWP) in Eastern Africa was $3.3 billion. In comparison, South Africa did $48.3 billion worth of GWP that same year.
To help solve this problem, CEO Jihan Abass founded Lami Technologies in 2018, to democratize insurance products in Kenya. She terms her goal as enabling more Africans buy insurance. Currently, Kenya has over 50 insurance companies, yet the penetration level is only at 2.4%.
According to Jihan, the driving force for Lami was making insurance widely available. Building the technological infrastructure to facilitate the distribution of insurance was the best way to increase the penetration level in Africa.
After studying the market and noting Kenyan’s preferred mode of buying insurance products, Lami adopted a B2B2C approach to leverage the trust already built by platforms that converse with customers daily and innovate around it. The approach, through an API, allows businesses like banks, startups and organizations to offer digital insurance products to their users. The product can also be used by partner businesses to manage their own insurance needs.
In Kenya, it takes about 90 days for claims to be processed for an average African insurer. Abass noted that Lami has reduced this to a week, a strategy that has enabled the company to developed trust with customers.
Another challenge that Lami has been able to overcome is getting insurance companies onboard. According to the CEO, transitioning from a traditional way of offering insurance to digital distribution channels only worked because Lami began to show early the value of customer experience and journey which requires getting the right insurance to the right customer at the right time.
Since its inception, Lami has sold more than 5,000 policies. It has partnered with more than 25 active underwriters, including Britam, Pioneer and Madison Insurance. These underwriters help in distribution of more than 30 products from medical and employee benefits to motor and device insurance.
Commenting on the industry, Abass said, “I think there’s huge potential in the insurance industry. Despite the low penetration, the annual market is worth more than Ksh. 6.408 trillion ($60 billion) a year. I think people are starting to open their eyes to insurance as opposed to other financial services.”