In 2016, the insurance industry in Nigeria generated an estimated gross premium income (GPI) of $58.4 billion despite the low penetration rate (0.45%) in the country. Insurance in the country can be traced to 1918 when the Royal Exchange Assurance Agency was inaugurated. However, the first indigenous insurance company, African Insurance Company Limited, was founded in 1958. In 2014, Nigeria’s oldest insurtech platform, Auto Genius, was launched by Venia Technologies.
Insurance penetration in Nigeria is low compared to other African countries like Kenya (2.7%) and South Africa (16.99%). With only 1% of Nigerians holding an insurance policy, there is clearly an untapped opportunity in the country. The National Insurance Commission lists 13 composite, 2 re-insurance, 25 non-life, 14 life and 2 takaful insurance companies on its website. Some of the well known insurance companies in the country are AXA Mansard, Cornerstone Insurance, Industrial and General Insurance Plc among others.
The challenges facing insurance companies are majorly the same across many African countries. There are cultural and religious beliefs that prevent people from holding an insurance policy. A good number of people also see insurance as a luxury that they cannot afford. Credit rating agency and research Augusto & Co. identified that there was also an untapped female retail insurance market. It found that there was a need for insurance products targeted towards women entrepreneurs that will underwrite risks involved in SMEs and provide life policies. While technology presents an opportunity to leapfrog these challenges, traditional insurance companies have done very little to take advantage of it. There are very few like Niger Insurance for example which has a platform which allows users buy motor insurance and renew their policies online. Linkage Assurance also recently got approval from NAICOM to sell its insurance policies online.
Kola Oyeneyin founded AutoGenius after hearing many stories of insurance companies that don’t pay claims and also people falling victim of fake insurance agents. His experience buying insurance cover from a comparison website in the UK and being able to make a claim on his burgled car in a short time further piqued his interest in insurtech. His startup AutoGenius, allows users buy auto insurance online. They currently work with traditional insurance companies including AIICO Insurance, Leadway Insurance, Custodian & Allied Insurance and Ensure.
Another insurance comparison website, CompareIN won the inaugural Venture Clash Lagos pitch competition with a prize of $150,000. CompareIN will now be pitching at the Yale School of Management later this year as one of the finalists at the competition. The startup which was launched in 2015 allows users compare and buy an insurance policy online.
There’s also Cassava, an insurtech company which allows individuals make small weekly and monthly insurance subscription payments via debit card or USSD or through their mobile airtime. Useers can also adjust their payments based on their cashflow. The startup appears to still be in beta stage. On the hand there’s CompareGuru which is also a comparison website which allows users get quotes for healthcare, life, travel and fire insurance.
Telecoms companies in Nigeria have also ventured into insurtech. There’s Airtel Insurance which provides insurance cover to subscribers who recharge their phones with a minimum of 1000 Naira every month. With the low insurance penetration and Nigeria’s large population, insurance in the country is still a largely untapped sector. Insurtech startups can leverage technology to take advantage of the gaps that currently exist in the market. Opportunities for insurtech startups exist outside price comparison and buying insurance online especially in the area of offering microinsurance and products targeted at women.