Q&A: Tunde Salako, Founder of Africa InsurTech Rising

Salako talks to IIR about Africa’s insurance market opportunities and how InsurTech is working on the continent to digitize the industry and increase insurance penetration.

(Ikoyi Link Bridge, Lagos, Nigeria. Image credit: Shutterstock.)

In July 2019 Tunde Salako and Osi Akpene founded Africa InsurTech Rising (AIR) in Lagos, Nigeria to spotlight insurance innovators. Salako says AIR Is on a mission to build and nurture the African insurance technology space with a view toward increasing insurance penetration and inclusion on the continent. IIR recently got acquainted with Salako on the occasion of AIR’s partnering with InsureTech Connect (New York) on an international innovation program called The Bridge, which will identify and showcase insurance technology solutions created by Africa-focused startups and provide B2B opportunities, mentorship, visibility, capital access and sparring opportunities to startups. We took advantage of that story to get to know Salako and AIR better.

Insurance Innovation Reporter: How did you get involved in InsurTech? My understanding is that you have a background in medicine.

Tunde Salako, CEO & Co-Founder, Africa Insurtech Rising: Yes, I got my medical degree from the College of Medicine at the University of Lagos. Later, I moved to England and got a MSc in Health management from the Imperial College Business School. During the last 15-or-so years, I’ve found myself in business, particularly in the insurance space. I like to describe my Ikigai as connecting the dots between insurance, technology and the challenge of deepening penetration. My interests cut across technology, analytics, and business process automation. I am passionate about the use of technology to galvanize inclusion in the insurance space, and that’s how my journey pivoted towards this end.

Tunde Salako, CEO & Co-Founder, Africa Insurtech Rising.

IIR: Tell us a little about your strategy for building the African InsurTech space.

TS: We express our strategy with the acronym RIDE, which stands for resilience, innovation, divergent, excellence. We are very deliberate about building the ecosystem via stakeholders’ engagements and collaborative funnels that cut across continuous programs ranging from podcasts-to-webinars, knowledge sharing, capacity building, conferences and acceleration programs. These programs constitute 4 major pillars which are mentorship, investment readiness, clarity and visibility.

IIR: How did AIR’s relationship with ITC come about? How is ITC supporting The Bridge?

TS: We are privileged to have a budding relationship with ITC which began last year. It started from the ITC world tour which was held virtually in 2020 due to the pandemic. We were fortunate to host the Africa tour for both anglophone and francophone areas alongside the Africa Fintech Network—another partner of ours. During the planning, coordination and execution of the program we forged stronger bonds and found the team to be great fun to work with and learn from. Fast forward into the ideation and planning of The Bridge, we approached the ITC team to be our co-partner and support, which they graciously accepted Jay Weintraub, Samara Jeffe and Teri Ryan are just an awesome, value-driven team. By the way, Jay coined name for the program The Bridge during an ideation session.

IIR: Tell us a little about the current state of the African insurance industry, how many companies (both indigenous and multinational presence) where it is strong, both in terms of geography and type of risk covered.

TS: We are home to close to 16 percent of the global population, but the current insurance penetration in Africa is less than 3 percent. South Africa leads the continent with 17 percent, Kenya has a penetration of about 2.9 percent, followed by Rwanda at 1.7 percent. Nigeria is at about 0.8 percent, and Tanzania at about 0.7 percent. Despite the low levels of insurance uptake, there continues to be increased interest and focus from major international insurers, re-insurers and brokers. Giants of the insurance/reinsurance industry are active in Africa, including AXA, Swiss-RE and Allianz, among others. According to a recent Mckinsey report, Africa is positioned to be the second fastest growing region for insurance globally after Latin America. The report also estimates the gross written premium in Africa is currently valued at 68 billion USD. While these numbers are huge, the opportunity is not evenly distributed across the continent for several reasons. South Africa is in a category of its own, with about 70 percent of premiums. The McKinsey report classifies the rest of the continent into six further primary insurance regions which are weighted according to their gross written premium:

  • North Africa: 12.9 percent
  • East Africa: approximately 4.8 percent
  • Angola: approximately 1.2 percent,
  • Anglophone West Africa: 2.8 percent
  • Francophone Africa: 3.9 percent, and
  • Southern Africa: 3.8 percent.

These figures and description given above give a fair sense of what the terrain is currently like. Each region remains regulated differently. For example, we have the CIMA which is an umbrella body regulating about 14 francophone countries whilst there are about 14 regulatory national independent bodies per country in Sub-Saharan Africa. There have been more recent changes such as the AFCFTA (African Continental Free Trade Agreement), which creates massive opportunities for the financial services and insurance industry growth because of its primary objective to foster homogenous tariffs and ease trade amongst African countries.

IIR: What are the prospects for the growth of Africa’s insurance industry? Where are the most promising growth markets, and for what kinds of risks, both personal/individual and commercial?

TS: The growth opportunities really are huge. Prior to COVID-19, McKinsey reported that the African insurance market was poised to grow at an estimated compound annual rate of 7 percent per annum between 2020 and 2025. This is nearly twice as fast as North America, three times that of Europe, and better than Asia.

As a result of the impact of the coronavirus, that trajectory might be altered, but this does not imply that the patterns of the potential future growth will be stunted. Let’s also bear in mind that there might be a few outliers where we will experience acceleration based on existing trends, as we begin to see more  digital and remote channels unfold which have the potential to unlock new value chains and therefore new market opportunities.

In terms of promising growth spots, one thing I will re-iterate is that the continent is very diverse, with different factors playing out in different geographical spots. Hence the different regions mentioned earlier are all poised to experience different levels of growth per time. However, if we choose to follow the “money trail” and talk about funding flow recently, there’s the market’s economic description called the “Big Four,” which are Kenya, South Africa, Nigeria and Egypt.

IIR: How is the InsurTech movement being lived in Africa, on both the insurance company side and among the InsurTechs/entrepreneurs?

TS:  I would observe that there seems to be a wall that separates the two sides in all climes! What is most apparent, now more than ever is the urgent need for legacy modernization. If it was slow before and, we possibly took our time, the pandemic reinforced the fact that there is no permanent status. Digital has been imposed on us whether we want it or not. But then there are so many opportunities knocking with the effects of the pandemic. The heavy lifting being traditionally done by insurers are being re-examined to see what links in the value chain can be deconstructed and handled by InsurTechs, particularly when it comes to alternative new channels of distribution. These are the trends we see unfolding into a “new normal.”

IIR: What are some of the hotspots of insurance innovation in Africa, geographically and in terms of the parts of the insurance value chain?

TS: We talked about the Big Four earlier, but there’s also innovation spurring out from other places such as Botswana, Kampala, Kigali, Mozambique and Accra. Also in the francophone regions, the likes of Mali, Senegal, Algeria and Tunisia. These innovation hotspots cut across auto insurance—for example, telematics, to parametric crop insurance to fraud management, micro-insurance and digital brokerage, SaaS solutions, just to mention a few.

IIR: What are some notable innovations that have emerged from African InsurTechs?

TS: Currently we are seeing products being built around the emerging trends of sharing economies, hyper-personalization and usage based systems, leveraging technologies such as AI, IoT, cloud computing and especially mobile to create  innovative products with a push effect on  peer-to-peer/crowdfunding insurance, parametric crop insurance, short term/micro insurance services, embedded insurance solutions—especially in regions where M-pesa is operating , pay-as-you go insurance just to mention a few.

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Anthony R. O’Donnell // Anthony O'Donnell is Executive Editor of Insurance Innovation Reporter. For nearly two decades, he has been an observer and commentator on the use of information technology in the insurance industry, following industry trends and writing about the use of IT across all sectors of the insurance industry. He can be reached at [email protected] or (503) 936-2803.

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