MyCover.ai Nigeria to scale its open insurance API platform with new funding

the African insurance market is expected to grow at a compound annual growth rate (CAGR) of 7% between 2022 and 2028, reaching $120 billion. As impressive as it may seem, the insurance industry in Africa could be worth more if insurance penetration on the continent wasn’t too low, less than 3%, according to report. As a result, traditional insurance companies have limited markets to sell their products, which in many cases are below global standards.

However, with a growing young population, increased use of smartphones, cheaper internet access, and the proliferation of fintech applications, the insurtech market is taking shape as startups roll out solutions to various customer segments seeking to deepen penetration. One solution based in Nigeria, MyCover.aitoday announced that it has raised $1.25 million in seed funding led by Pan-African venture capital fund Platform Ventures with participation from follow-on investors Founders Factory Africa and Techstars.

The Nigerian insurtech startup, which participated in Toronto’s Techstars program last year, said it would use the investment to leverage its in-house operations and technology talent, invest heavily in its proprietary technology and strategically expand its operations into other African markets.

“We want to have a significant market share in a market with insurance penetration of less than 1%. While doing that, we want to expand into other African markets and go to other emerging markets, and eventually the rest of the world because we think our solutions are globally applicable,” co-founder and CEO Adebowale Banjo notify Zero2Billions by phone.

Banjo founded MyCover.ai, which provides an open insurance API that enables businesses to embed insurance into their existing products and services, with CPO Alexander Igwe-Ifendu and CTOs Fred Ebho in 2021. MyCover.ai intends to address several issues in the African insurance market. First, insurance providers work in silos. As a result, there is a lack of visibility into what they should optimize for consumers, leading to a lack of access on the part of the customer — and for those who do have access, they pay a heavy price. In short, the main market challenges include lack of access, inadequate coverage, unaffordable insurance products and poor customer experience around the insurance process.

“There are issues with access and distribution overall, particularly with the types of products insurance companies produce and what people need and can afford,” said Banjo, explaining why MyCover.ai was created. “We also found that there is no handshake between insurers, the visibility and data needed to progressively improve product and underwriting is lacking.”

Initially, the founders built a comparison site, pitting insurance providers against one another. But after further market research, they turned to the infrastructure game operating at three important touchpoints: underwriting and product development, distribution, and insurance claims. They believe this will rapidly strengthen insurance adoption and growth in Nigeria.

Image Credit: MyCover.ai

MyCover.ai provides an open insurance API that integrates with insurance companies, including Hygeia, Leadway, Sovereign Trust, AIICO Insurance, and Allianz. Startups are streamlining claims processes for these companies and end users, including fintech, proptech, e-commerce, telecom, logistics and mobility/boarding companies, and the BNPL platform, which can choose from more than 30 personalized insurance products to embed into their platform. For example, a third-party logistics platform may offer goods on demand in transit coverage for goods moved in its fleet and provide passengers with health insurance and personal accident protection.

“We want our rails to mainstream insurance, increase access, and provide great products while using AI to power our claims management solutions,” comments Banjo, referring to how MyCover.ai differs from other API-based insurers, including Kenya’s Lami Technologies and Nigeria’s Curacel. “Also, in the end, it all boils down to the experiences that people get. What we understand or see in the marketplace is that people are more attuned to personalized products than just getting any kind of insurance product in the marketplace. So what we’re trying to do is enhance the customer’s insurance experience and help launch personalized products based on certain lifestyles and nuances,” added Igwe-Ifendu on the call.

Only 0.5% of Nigeria’s population is covered, according to the National Insurance Commission (NAICOM). This means that most people in the country have never received insurance protection and must rely on personal funds to save themselves in the event of an emergency. Individuals are left powerless and trying to recover from negative circumstances, often plunging them into deeper poverty. This is why in addition to its API product, MyCover.ai has a B2B platform, MyCoverGenius, which offers entrepreneurs and small and micro enterprises the opportunity to buy insurance products from startups, thereby protecting their staff (i.e., access to antenatal care, eye and dental services) and assets, starting from $2 (~₦‎1,500) per month.

MyCover.ai claims to have recorded over $1 million in written gross premiums from partnerships with 30 national insurance providers since its launch. Banjo, who prior to launching MyCover.ai was head of business development at MallforAfrica, also revealed that the insurtech platform, which is in various stages of discussions with around 50 other providers in its pipeline, processes more than 50,000 policies while servicing 30,000+ end users. The CEO added that the two-year-old insurtech is doubling its revenue in 2022 from the previous year and intends to replicate that same growth by the end of this year.

Commenting on the investment, Dotun Olowoporoku, general partner at Ventures Platform, said, “Adebowale and his team are reshaping the insurance landscape in Nigeria and setting their sights on the wider African market by building the continent’s much needed insurance infrastructure. Unlike other insurtech solutions that focus on specific areas of insurance penetration among the underserved, MyCover.ai takes a collaborative approach and offers a suite of services that cover the entire spectrum of these challenges.”