Kenya's Turaco aspires to insure 1 billion lives

Kenyan-based insurtech Turaco, which provides affordable health and life insurance across the African continent, aspires to insure 1 billion people.

Founded in 2019 by Ted Pantone and Peter Grossman, the company announced that it had reached a milestone of 1 million insured members in September 2023, and that number had increased to 1.5 million in late 2023.

"We're passionate about getting insurance into the hands of the uninsured across the continent as insurance coverage is incredibly limited in Africa – insurance penetration is a mere 3%, the lowest in the world," Pantone told Connecting Africa.

He said without a safety net, people are vulnerable to catastrophic health incidents like malaria or typhoid cases that spiral out of control and can be harmful to them and their families.

"The reality is that even middle-class families slip into poverty after having a devastating health emergency – all because they do not have insurance," he explained.

Pantone said he believed that there are mainly two reasons why there is such a low insurance uptake on the continent.

"Most insurance is employer-based, yet in Africa, an estimated 80-85% of people work in the informal sector earning US$5.50 per day – they're self-employed or working for a micro enterprise or a small company that doesn't provide insurance.

"Secondly, since traditional insurance companies have costly brick and mortar business models where they use agents to sell insurance policies, their policy prices are too expensive for the mass market," he said.

Funding and geographic reach

In September 2022 the company raised a US$10 million Series A round and is using that capital to grow across its operating markets.

Operating in Kenya, Uganda, Ghana and Nigeria, Turaco has partnered with telcos and microfinance banks to sell insurance products to their customers through the platforms.

Turaco works in two ways: It sells insurance as a standalone product that customers can buy directly, and it embeds its insurance into partner products.

"All of our insurance products are embedded in our partners' platforms, but customers have two options, it's either bundled with another product, like a loan, or they can opt in to buy insurance," he added.

Turaco raised US$10 million in September 2022 and has been using the funding to grow in the markets in which it operates. (Source: Turaco)

"Early in 2023, we launched a hospital cash and life cover with Airtel in Uganda. Their subscribers can buy insurance for as low as 1,000 Ugandan shillings (US$0.26) simply by dialing a short code," Pantone continued.

Insurtech regulatory framework

Pantone said that the regulatory frameworks in different countries have influenced the company's operations in its African markets.

"We received our underwriting license in Uganda in 2023, which meant we can underwrite our premiums instead of partnering with an insurance company to do the underwriting," he explained.

"We were able to start underwriting because the Ugandan insurance regulator created a new license tailored to insurtechs focused on the micro market like us."

He added that in many markets on the continent, a micro-insurance license does not yet exist, though regulators are working on it.

Competitive advantage

According to the Turaco co-founder, insurtech has exploded on the continent with investors recognizing that there is a business opportunity in the industry.

He said the insurance gap is so large that 97-99% of Africa's population of over 1 billion do not have a safety net.

"We think as industry peers with our competitors, we share the same objective of increasing insurance access," he said, adding that what makes Turaco different is the faster speed of its claims process.

"The insurance industry doesn't have the best reputation and too many insurance companies take months to pay claims. Given the number of exclusions and fine print, they often end up limiting what would be a legitimate claim," he explained.

"Within the industry, claims are referred to as 'losses', a telling sign of the hostile regard that the insurance industry can have towards customers. It's for all these reasons that at Turaco we believe that the insurance sector desperately needs redemption," he concluded.

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— Matshepo Sehloho, Associate Editor, Connecting Africa