When it comes to digital technology, insurance is lagging behind other financial services. Although there have been a few startups in the current digital insurance field like Tractable and Lemonade, it hasn’t risen to prominence as quickly as other industries like payments or lending.
Despite the existence of huge players in the global insurance business, which has a market value of over $5 trillion, there are numerous opportunities to be exploited.
An African startup is making a name for itself with its innovative approach. Root uses APIs to let businesses and developers launch insurance products faster. The South African startup has acquired $3 million in venture capital to expand globally and establish the digital insurance sector.
Among the investors were Invenfin, Base Capital, Savannah Fund, P1 Ventures, Luno, and FireID.
To design and innovate around insurance, Root began with the idea that several impediments existed, including compliance and capital.
While other financial institutions started using APIs to enable developers build solutions specific to their offerings, insurance was left out, according to CEO Louw Hopley.
History
Root was created in 2016 to deal with numerous constraints, one of them being compliance and funding which prevented software developers and organisations from developing or innovating around insurance.
The Insurtech startup’s first product was programmable bank accounts and cards, but today its main focus is on insurance APIs. Root integrates with insurance companies, which underwrite the products that developers and business analysts create and integrate into their existing customer experiences, which can be found on a website, a chatbot, or a mobile application.
Market Size
Root primarily targets non-insurance companies with a consistent customer base; businesses that offer insurance as a secondary product. Telcos, retailers, and financial institutions are just a few examples. Some of the largest affinity insurance companies in South Africa are also powered by it.
Millions of policies and thousands of claims have been processed each month using Root’s insurance infrastructure. Depending on the size and complexity of the client’s requirements, it charges a monthly licensing cost.
Root not only helps developers and businesses establish insurance solutions, but also helps them reach more customers and stay compliant. The African startup plans to use the funding to develop its low-code digital insurance platform to new regions, particularly Europe.
It’s not certain which nations the Insurtech startup would target, but given the region’s insurance market, the UK, Germany, and France seem likely candidates. It intends to hire more technical and business talent in Europe, but Hopley believes the company’s core team will remain in SA.
Nonetheless, the company’s goal is to construct the global insurance industry’s operating system, according to Hopley.
The CEO believes a standard platform is required for people to develop, produce products, and integrate. That means the company is seeking to be the platform where product creators, actuaries, and developers go to construct and promote insurance products.
Hopley believes that allowing sub-economies to grow and others to build unique solutions within insurance will accelerate innovation. It essentially unifies the industry.
