Africinvest
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Africinvest

Turaco: Protecting African consumers from financial shocks

By: Patricia Rinke, Azza Khalfallah, Yassine Oussaifi, Khaled Ben Jilani

Africa has less than 3% insurance penetration, and millions of people have no insurance safety net at all. Focusing on Subsaharan Africa only, insurance penetration is close to 0.7%, more than 13x lower than the average in OECD countries, revealing an even more prevalent gap in the sector. This leaves consumers vulnerable to unexpected financial shocks, and holds back broader economic development. Traditional insurers fail to reach low-income earners with adapted products and distribution channels, and microinsurance institutions lack the technology infrastructure to scale effectively.

A substantial opportunity. At the end of 2020, Africa’s insurance industry was valued at $68B. With South Africa still accounting for 70% of collected premiums, the Cathay AfricInvest Innovation team sees significant potential for growth elsewhere on the continent.

Insurtech startups operating in Africa have attempted to improve insurance coverage by adopting different models, from B2C (‘business to consumer’) players often specialising in particular sectors such as automobile or health, to B2B (‘business to business’) strategies forming partnerships to reach end consumers. As part of the latter group, African Insurtech Turaco has developed an innovative distribution model, embedding insurance products in its partners’ offerings, similar to Igloo (a Cathay Innovation portfolio company) and Pasarpolis in Southeast Asia.

We believe that Turaco has built the right model to respond to the unmet demand in the African insurance sector. This is why:

Turaco provides inclusive insurance solutions for emerging markets

Turaco has been a market innovator, offering new forms of insurance partnerships and enabling its distribution network to integrate a large and diversified range of insurance products with their existing services. Turaco is able to do this via a B2B and B2B2C business model, forming partnerships with Fintechs, Microfinance Institutions, as well as other digital players and companies with large user bases such as Telcos and NGOs.

Now is the right time for embedded insurance models like Turaco’s. The recent rise of African startups building scale based on network effects offers an opportunity for Insurtech players to embed insurance into those platforms.

Through its distribution channels, Turaco provides affordable insurance products to underserved communities across the continent, protecting them from financial shocks. Active in Nigeria, Kenya, and Uganda, the company provides multiple forms of insurance, including medical, asset, life, and vehicle insurance packages, with prices starting around US$2/month. The firm has formed partnerships with some of Africa’s top tech-enabled companies, including Sun King, One Acre Fund, Tugende, M-KOPA and VisionFund, as well as global players in the insurance industry such as AXA and Prudential.

A flexible end-to-end solution. Turaco embeds insurance within its partners’ core products or services, and collects premiums by integrating with existing payment processes. Its robust API integration allows for easy and efficient collaboration at no additional risk or cost. Customers can sign-up for insurance with the click of a button, manage the claims process easily via Whatsapp, and get paid in mobile money. Turaco’s tech-enabled customer journey creates an intuitive and highly convenient experience compared to traditional insurance services, which are characterised by form-filling and cumbersome processes.

Turaco has seen exponential growth since it launched in 2019 and has already covered over half a million lives, with plans to expand further to drive inclusive insurance for Africans.

Future growth: Leveraging strategic partnerships to power the future of inclusive insurance

Africinvest has co-led Turaco’s recently closed $10 million Series A equity round through the Cathay AfricInvest Innovation Fund (“CAIF”) alongside Novastar, with other experienced investors such as ENZA Capital participating in the round. Turaco is precisely the kind of venture CAIF is keen to support: A fast-growing African startup with a unique selling proposition aiming to become an industry leader. Leveraging our presence on the ground and investments in the insurance space in East and West Africa, AfricInvest will support Turaco’s expansion across the continent. Turaco’s tech-enabled financial services and integration approach align with our commitment to both innovation and financial inclusion, and its pan-African presence and ambition match ours.

Most importantly, Turaco’s services lead to measurable, real-world impact, enabling underserved African consumers and businesses to protect themselves from financial shocks.

Want to learn more about the activities of the Cathay AfricInvest Innovation Fund? Follow AfricInvest and Cathay Innovation on Medium to stay updated on news and insights in the African VC ecosystem.

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AfricInvest

AfricInvest

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With nearly 30 years of investing in high-growth sectors, we are one of the most experienced PE and VC investors on the African continent.