South Africa's Micro-Insurance Industry Essay

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During a podcast interview taped in July 2016, Frank Schutte told me that his insuretech startup aimed to transform South Africa’s micro-insurance industry. Previously the managing director of retail product and marketing at Liberty, one of South Africa’s largest life insurers, Schutte left his cushy corporate gig earlier last year to start a business called MobiLife – “Africa’s first 100% mo-bile insurance offering.”

Nearly a year and a half later, Schutte remains tight-lipped about his business numbers, stating that things are “going very well”. He is, however, as bullish as ever on the notion that technologi-cal innovation will catalyse the creation of new distribution models and connect financial services to lower-income consumers,
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In the couple of months leading up to this deal going down, a handful of other sizeable insuretech startup fund-ing announcements have been made by big-name insurance corporations.

Given that backdrop, I asked entrepreneur-turned-angel investor and founder of Click2Sure, Daniel Guasco, to factor in on whether success for insuretech ventures is possible without engaging in partnerships with big scale players.

Guasco explained that in order to write an insurance policy, a license is required, and that can be hugely expensive. In his opinion, partnering with a traditional insurer or reinsurer is the only real-istic way to get an insurance product to market.

Speaking to the same point, MobiLife founder Frank Schutte echoed Guasco’s sentiments, stating that the biggest challenge for any new insurance play is building distribution to achieve scale. Partnering with entrenched financial services players not only gives insuretech startups access to venture capital needed to extend their runways, but allows them to leverage trusted brands and exploit the benefits of scaling across an established customer footprint.

Complicating the nimble efforts of startups like Click2Sure – a full-stack digital insurance platform offering clients an array of bolt-on insurance products at point of sale – is the fact that even as big brand insurers fund innovative ventures, they continue to cling fiercely to their dominance
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