The first time I spoke to Ibraheem Babalola, the CEO of car insurance startup, ETAP, he was quick to let me know that his mission was to make Africans get car insurance as easily as they think about getting a subscription for their preferred movie streaming platform. That mission hasn't changed and the startup's newest feature builds on that mission.
ETAP Takaful as it is called is built around the Takaful Islamic insurance model where users contribute to a pool to insure members against loss. The Takaful operator, in this case, ETAP, manages the process and at the end of a specific period, any surplus is redistributed to policy holders. Of course, the operator takes an agreed portion to cover the cost of administering the process.
With ETAP Takaful, users not only get money back, they can choose to donate it to a charitable cause of their choice or use it to fund their next Takaful contribution on the app.
"What makes ETAP Takaful amazing is that we have taken an ethical, social impact, social good, community driven approach to make sure that we have created insurance that benefits everyone. So it benefits the policy holders, the underwriter, and more importantly, benefits the community that we are a part of or a community that we want to support.
"We have now given policy holders options saying you can either get your surplus in cash back or you can collect the money and say, I want to use it as part of my premium, or all of my contribution with ETAP Takaful or you can take that surplus and donate to a non-profit cause that you care about," Babalola tells Techpoint Africa over a call.
How big is the Takaful insurance market?
It's no secret that the general insurance penetration in Nigeria is poor. Only 0.5% of Nigerians have any form of insurance. Car insurance fares slightly better with only 3.4 million out of the 12 million cars in Nigeria possessing an insurance coverage.
By 2030, the global Takaful insurance market is expected to reach $97.17 billion dollars, up from $24.85 billion in 2020. Unsurprisingly, this growth is led by countries in the Gulf region with a predominantly Muslim population. But with 48% of the Nigerian population being Muslim, ETAP Takaful provides Muslims with an ethical way to access insurance.
However, Nigeria's Muslims are predominantly located in Northern Nigeria, a region with some of the highest rates of financial exclusion in the country. While this could pose a problem for ETAP, Babalola is quick to point out that ETAP Takaful is not designed to solve financial inclusion problems.
"ETAP Takaful doesn't solve for financial inclusion; it solves for religious inclusion and ethical inclusion for people that believe that the conventional insurance doesn't serve their values. There's still a lot of financial inclusion work that needs to happen in northern Nigeria but as it relates to car insurance, 50% of the 13 million vehicles in Nigeria are in Lagos and Kano. So for you to have a car there is a higher chance that you're gonna have a smartphone anyway."
Although Takaful insurance is more common among Muslims, Babalola stresses that ETAP Takaful is open to everyone regardless of their religious leanings.
"Whilst it's based on Islamic principles, the narrative that we're pushing is the ethical for social good narrative, which means that even if you don't identify with any faith, I'm sure you identify with supporting non-profits or courses that you care about."Since its launch, ETAP has insured more than 3 million trips through its flexible car insurance policy while it collects more than ₦1.5 million in weekly premiums. Building on the progress it has recorded in Nigeria, the startup plans to launch in Ghana soon.