Insurance is mostly one of the most overlooked areas in Nigeria and Africa as a whole. Compared to people in western countries, the majority of Africans treat insurance like hot oil that shouldn’t be played with. The average African sees insurance as unnecessary and those who know about its usefulness may find it too expensive or not well-tailored to them. As per a report, insurance is an important economic driver for emerging economics but it is unfortunately mostly overlooked. This report also suggests the expansion of Africa’s lucrative insurance market as a major way of creating inclusive prosperity in the region.
For individuals living in countries in Africa, insurance should be treated as sacred for a large number of varying reasons. In Africa, there are no security and safety programs for citizens where the government provides, for example, health insurance and unemployment benefits for the citizens. Insurance is, therefore, a major way to protect oneself. Even with all these, Africa’s insurance market stands at a 3 percent penetration rate and with South Africa excluded it stands at 1.12 percent, according to a 2018 McKinsey study.
This may be changing in a few years thanks to startups that are taking it upon themselves to bring customer-focused products. On our radar today is Casava, the Kuda of insurance. The startup describes itself as “Nigeria’s first 100 percent digital insurance company”.
Casava, an insurtech startup has raised $4 million in its pre-seed round; the largest in Africa’s insurtech history and the second-largest for a Nigerian startup, just behind Nestcoin’s record.
The startup was founded by Bode Pedro who ran VisaCover, an insurance brokerage company in 2014. The idea for Casava came while he was at VisaCover with the company offering an alternative in the auto insurance market that allowed Uber drivers (one of its partners) to make weekly insurance payments instead of quarterly or yearly payments.
The founder and CEO explained that, “We saw mass adoption and knew the market needed insurance payments to be broken down. But then we noticed that as brokers, we didn’t have full control about that process and we weren’t giving people the best experience. We knew if we were going to take insurance to the next level, then maybe we need to control that product and be involved in product end-to-end”.
Bode Pedro left VisaCover in 2016 and in 2019 brought on Olusegun Makinde, an ex-VP at JP Morgan, as Chief Operating Officer to build his startup Casava. The startup acquired a micro-license and fully launched in April 2021 with the aim of providing affordable and accessible insurance products to the Nigerian population.
Explaining why people shy away from insurance, the CEO said “For insurance, it’s about negative outcomes, which Nigerians and human beings, in general, don’t like to think about. Even if they think about it, they clear it in their head. So the key to success in insurance is to hack behaviour with your product…”
“…How do you make your product attractive?” he asked.
At Casava, the consumers are the core of its operations. Prospective consumers can subscribe to the platform’s insurance products through its website, mobile app pr even instant messaging platform WhatsApp, and get to enjoy a 30-day free trial package with the option of opting out if they do not want to continue or like the service. If they do choose to continue, they get to enjoy value-added services that include executive coaching, telemedicine and job services.
Casava provides insurance for health and job loss which is not very common in the country. With Casava’s Income Protection Product, subscribers can insure their income from ₦500 monthly and receive payment for up to six months if they lose their job, become sick or disabled. According to CEO Bode Pedro, “It’s been a successful product. We’re scaling it well and people are like, ‘I didn’t even know you could do this.’ We’re seeing companies trying to buy for their employees; even lenders are looking to get their borrowers to buy it”.
Casava’s Health Insurance product provides subscribers with access to over 1,000 doctors on telemedicine and 900 hospitals across the country. Its HealthCash reimburses users when they visit for specific periods. All users have to do is pay between ₦250 and ₦300 monthly.
Casava works with reinsurance partners who guarantee a refund when claims are paid as a licensed microinsurance underwriter. That’s how it makes revenue asides from profit—off subscription fees.
Casava says it already has over 66,000 subscribers and $16 million in insurance coverage. The newly-raised funds will be used to launch new products that’ll launch from life to travel, home and smartphone insurance. The funds will also be used to drive growth, improve its already existing products and technology.
The pre-seed funding round was led by Berlin-based Target Global and saw the participation of foreign investors Entrée Capital, Oliver Jung, Tom Blomfield, Ed Robinson and Brandon Krieg. Local investors, who also happen to all be founders, include Uche Pedro, Babs Ogundeyi, Musty Mustapha, Shola Akinlade, Olugbenga “GB” Agboola, Honey Ogundeyi and Opeyemi Awoyemi.