In Africa, insurance penetration ranges from 3% to 5% on average. South Africa accounts for the lion’s share of it; without it, the continent would grow at a rate of 1% to 2%, comparable to other developed technological and financial economies such as Kenya, Nigeria, and Egypt.
Even with all the advances in technology, the insurance industry remains one of the least affected by them. Many factors contribute to this, including bad experiences and dissatisfaction on the part of consumers and expensive distribution costs for service providers.
A number of startups, such as Kenya’s Lami, Ctrl, and South Africa’s Naked, have recently attempted to conquer every regional market by storm, armed with the required resources to grow up their operations. An Egyptian insurance company founded by the summer of 2021 Amenli alumni is expanding its operations north and raising $2.3 million in an initial round of funding.
Around two dozen investors participated in the round, including a number of local and international firms, including co-lead investors P1 Ventures (together with GFC, Liquid2, and Cliff Angels) and Anim Fund (Founders Fund’s scout fund).
Egypt’s $2 billion insurance market is being addressed by Amenli, which was founded in 2020 by Shady El Tofa, Omar Ezz El-Din, and Adham Nauman. However, it was a series of personal encounters that persuaded CEO El Tohfa to investigate the market’s potential.
El Tohfa relates the storey of two of his close friends who suffered the loss of their fathers. Even while his first friend’s loss had a detrimental impact on their well-being as a result of unpaid medical bills, the other friend reported that having insurance had allowed his family to avoid financial issues despite his father’s pricey treatments.
In addition to Nauman’s newfound knowledge that the average Egyptian might get insurance without being employed, and the weakening of the Egyptian pound in 2016, these accounts affected how the founders perceived the significance of Egyptian insurance.
Insurance in Egypt has traditionally worked like this: an insurer collaborates with a bank, selling insurance mostly for big-spending consumers with large credit limits (as they are the most lucrative). Due to a lack of available resources, many service providers are restricted to serving businesses only.
El Tohfa says Amenli is targeting a market of around 50 million adults in the middle-income bracket. A single insurance policy from an insurer can be purchased in three to six weeks on average by someone from this sector seeking insurance. According to El Tohfa, the reason behind this is that insurance companies do not place a high value on individual customers. Additionally, “the economics don’t work for them” because of the high expense of servicing.
Amenli, on the other hand, is determined to make it work. Customers are prompted to complete a few questions when they first access the platform, and the responses determine which insurance products — life, medical, or automobile — are recommended.
Ahead of the company going live, Amenli would meet with insurance providers to form relationships that would allow customers to get instant quotes on a variety of insurance products. CTO Nauman, on the other hand, admitted it was a challenge. “We were surprised to find that most organisations didn’t have the ability to provide APIs or documentation to integrate.”
Consequently, Amenli has collected and structured a model to serve these quotations instantaneously and built its own infrastructure to service them. In addition, it offers APIs to other insurance companies, taking advantage of its status as Egypt’s first certified digital insurance broker.
Amenli’s post-YC life has been nothing short of wonderful… El Tohfa claims that after graduating from the accelerator, the company’s sales have tripled. Although the number of policies sold increased, the number of consumers did not, according to the CEO, because they primarily repeat customers who utilise numerous policies at the same time.
In comparison to the minimal industry standard of three weeks, the platform produces over 500 policies in less than 10 minutes. Despite the promising results, the company’s founders believe that establishing product-market fit is still a long way off. There was no baseline and he didn’t know if people would get insurance online, so he’s still trying to prove that there’s demand for it.
“Everyone says that in Egypt, people don’t want to comprehend or get insurance. However, we discovered that educated middle-class people are aware of insurance, understand it, and desire to purchase it, despite the fact that it was previously out of reach for them.
El Tohfa and Nauman were founder members of the Egyptian fintech Paymob before creating Amenli. Paymob’s CCO was El Tohfa, and its tech lead was Nauman. In 2017, the two were working on a microfinance product when they encountered insurance for the first time. “It piqued our interest because of the intriguing notion.” When it came to insurance prior to it, we knew absolutely nothing about it. But we found it fascinating,” remarked El Tohfa.
The two decided to go into insurtech full-time after years of research and fascination. However, the company didn’t get off the ground until Omar Ezz El-Din, the company’s third co-founder and CCO was introduced and an insurance brokerage licence was obtained.
Amenli has been functioning with Y Combinator’s support for a full year, preparing him for the challenges ahead. When it comes to acquiring clients, a 7 per cent compound annual growth rate (CAGR) is projected in the market over the next five years according to the CEO.
