Platform Economy is the next frontier for insurance to reach emerging consumers in Africa

Saurabh Sharma
4 min readJan 4, 2021

Africa scores very low in uptake of insurance with continent’s insurance penetration at 2.8% compared to world’s average of 6.8%. In Kenya, it is even more concerning as penetration has decreased recently as GDP growth rate has outpaced the growth in insurance premiums. This low penetration has left a huge protection gap exposing households and businesses to unforeseen shocks as experienced during the pandemic.

Platform economy partners enabled Britam Microinsurance to make insurance accessible to 7 million+ users

This low penetration of insurance market has been due to both supply and demand side issues. Majority of insurers, except a few, have ignored the emerging customer segments such as micro businesses and low to lower-middle income households. This has led to a dearth of customer-centric products targeted at this market. Due to this reason, awareness and understanding of insurance has remained low among majority of the population. Traditional products with complex terms and inflexible premium payments terms have further alienated potential customers.

The New Frontier; Platform economy

The insurance industry must come out creatively in the new tech-era with a client-centric approach that will enable them to not only increase their client bases but also save the underinsured from various shocks. Platform economy provides an excellent opportunity to achieve this.

Platform economy refers to economic activity (buying and selling) facilitated by digital platforms that connect inter-reliant groups such as providers & producers of services and products with users and consumers. Examples can include superplatforms like Wechat (with 1.2 billion users) and Whatsapp (2 billion users) that started with social activity but have now transformed into some of the biggest facilitators of business activity across the world. Closer home, platforms like M-tiba, Little Cabs and Twiga foods have revolutionalized health, transport and agriculture sectors respectively. These platforms have organized sectors that were previously fragmented.

Platform economy provide unprecedented opportunity to financial services providers in general and insurers in particular. Firstly, by acting as aggregators they provide access to large population groups. As majority of such platforms are tapping into informal economy (such as mama mbogas in case of Twiga), they provide access to emerging but underserved customers. Secondly and more importantly for insurers, such platforms are an excellent source of data including demographic, financial and behavioral data that can be used by insurers to design relevant solutions. Finally, through technology, they can simplify key processes such as collection of KYC and premium making it easier and cost effective to distribute insurance at scale.

Re-Imagine insurance offerings

To realize this potential, a number of transformational changes are needed. Insurance regulator needs to make it easier for such platforms to offer insurance. At the same time, regulations should focus on consumer protection by ensuring that predatory behavior (as seen by mobile lenders) is not repeated by these platforms and insuretechs. Early support by the insurance regulator in Kenya for such partnerships has been quite encouraging. Governments needs to step in because increase in insurance penetration will help in protecting vulnerable communities and in developing capital markets that will strengthen continent’s financial sector. This can be done by learning from countries like India where government-funded, market-driven insurance programs have extended protection to millions. Supporting insurance programs that are trying to insure informal micro businesses can be a good start. Platforms themselves need to be more open to insurance partnerships by realizing the potential of additional revenue as well as ability to protect the excluded groups. Finally, it is the responsibility of insurers to design products and processes that suit the needs of the platform users. Instead of conventional one-size-all approach, context specific products should be co-created along with the platforms that meet client needs. Transactional and behavioral data from the platforms can be used to design such products. For example, a COVID-19 ride insurance co-created by Britam and Little Cabs has seen voluntary take up by thousands of users in a short period as it is specific to the context and need of users. Processes also need to be changed by minimizing KYC requirements, simplifying onboarding process and digitizing claims journeys.

Platform economy is transforming many industries and it has potiential to transform insurance sector as well. However, industry players, platforms, policy makers and regulators need to come together to achieve this by placing emerging consumers at the center of their efforts. The pandemic has taught all of us the need for risk mitigation and client centric solutions delivered through insurer-platform partnerships can meet this urgent need.



Saurabh Sharma

Expanding new generation insurance business models to reach emerging consumers