Apr 23, 2021

OKO secures US$1.2m seed funding for African farm insurance

William Girling
2 min
Malian insurtech OKO has raised $1.2m in seed money for the development of its smallholder farm insurance platform in Africa
Malian insurtech OKO has raised $1.2m in seed money for the development of its smallholder farm insurance platform in Africa...

The company’s round was co-led by Newfund and ResiliAnce, with additional investment from Mercy Corps Venture, Techstars, ImpactAssets and RaSa.

Currently operating in both Mali and Uganda, OKO’s mission is to ensure smallholder farmers have access to effective and affordable insurance. Using mobile technology, the startup is encouraging financial inclusion within emerging economies through solutions that require no upfront investment and optimise existing tech infrastructure.

OKO has stated that it will use the seed money to fortify its presence within existing markets, as well as expanding into new areas starting with the Ivory Coast.

Modernising African insurance

According to Simon Schwall, Founder of OKO, the importance of farm insurance in Africa cannot be overemphasised, “Agriculture is by far the largest source of occupation in Africa, with an estimated 33 million farms. 

“And yet, farmers are deprived of basic financial services like insurance and loans. We are using technology to solve this issue and secure the income of those farmers.”

Having accumulated 7,000 paying customers since it was founded in 2017, it seems that the development of specific technologies and their applicability to the insurance industry has precipitated OKO’s encouraging fundraising result.

“We believe recent advancement in IoT and data availability will lead to the rise of parametric insurance in Africa for the benefit of the local populations,” explained Augustin Sayer, Partner at Newfund. “Simon and his team have built solid bases in Mali from which OKO can now expand in new countries and offer new insurance products.” 

Innovating past the competition

Other companies, notably Pula in Kenya, which closed a $6m Series A round in January 2021, have recognised the potential for insurtech to be a force for good in the lives of African farmers.

What separates OKO from competitors, claims Daniel Block from Mercy Corps Ventures, is its ability to leverage partnerships and technology to create innovative and inclusive services.

"While other micro-insurance for farmers exist, we were impressed by OKO's ability to partner with a pan-African operator like Orange [Money] and establish a direct consumer link, which allows for an exciting opportunity to drive deeper user engagement and expand to a suite of insurance products for rural farmers in the future.” 

Image source: OKO

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Jun 19, 2021

Insurtechs are winning the race with legacy system companies

Tom Allen, Founder, The AI Jou...
3 min
Insurance has long been due an overhaul. The AI Journal’s founder Tom Allen explains how innovative insurtechs are changing the incumbent narative

Nestled in its own place within the world of financial services, insurance is arguably more unpopular than retail banking.

That’s hardly surprising given that, from a customer service perspective, insurance is something of an off-kilter transaction. You pay a sizable premium in exchange for a service you hope you will never have to use. This image problem is exacerbated by ubiquitous tales of insurers not paying out when it is time to make a claim.

The insurance sector has long been due to an overhaul, and this is where the disruptive force of insurtech comes in - one of fintech’s most upwardly mobile subcategories. Accordingly, last year, insurtech in the UK alone attracted £262m in investment, a growth of 60% on 2019, according to Tech Nation. Insurtech’s momentous growth has been captured in a new report by The AI Journal exploring this burgeoning sector. 

What exactly is insurtech?

Put simply, insurtech refers to technological innovations that seek to make insurance cheaper to buy and more efficient to use. In a similar vein to fintech, the large, established institutions have been dipping their toes into insurtech, but it’s the disruptors who are genuinely looking to shake up the status quo, diving into and exploiting those areas that traditionalists have little imperative to explore.

Examples are price comparison sites (one of the earliest forms of insurtech that was eventually snapped up by the insurers it initially sought to disrupt), claims software, customisable policies, or even smart-tech-enabled dynamic policies whose premiums can fluctuate depending on changing circumstances.

The latter, for instance, could use someone’s fitness tracker or smartwatch to monitor fitness levels, thus reducing the premium of a life insurance policy; or track a GPS system that records the location of a car and assesses risk levels accordingly.

Most consumers tend to shop around for their insurance needs and perhaps end up buying their contents insurance with one provider, their car insurance with someone else, and their pet insurance with yet another underwriter. Managing all these different policies, with their varying renewal dates and payment terms can be complex. This has led to the increase in apps that pull everything together.

More prosaically, insurtechs are developing AI that uses machine learning to act as an insurance broker, eliminating the need for a human intermediary and therefore offering more cost-effective and impartial advice.

Insurtechs and risk

But there are some obstacles in the way of insurtech’s continued evolution.

Insurance companies are averse to risk. Understandably so, as at the crux of the industry is the role of the actuary, whose job it is to analyse and measure the probability and risk of future events. So it’s little wonder that there’s a reluctance among the traditional players to welcome the disruption that insurtech brings.

Insurance is heavily regulated, a minefield of legality and labyrinthine jurisdiction, which means the idea of shaking it up can be anathema. And why would they, when their old-school business models are working perfectly fine?

There’s an understandable nervousness and unwillingness to work with startups, who themselves need to work with the bigger firms in order to underwrite risk.

While it seems like a catch-22 situation, there is growing, if cautious, interest from insurance companies, who can see the benefits of insurance with a friendlier face, innovative solutions, and a competitive edge through differentiation. As that tentativeness dissipates, the growth of insurtech will gather even more momentum.

Tom Allen's analysis is based on the findings of a new report on the fintech and insurtech industries produced by The AI Journal

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