My first interaction with Nigeria's insurance system came as an undergraduate at the University of Calabar. Students who had paid their fees qualified for health insurance.
I'm rarely sick, so it was not an attractive proposition despite my dad's constant pleas to get registered. It didn't help that many students complained about getting subpar services when they visited the clinic despite having insurance.
To make matters worse, on the few occasions I visited the hospital, I noted how the receptionists were wary of attending to anyone with a health insurance policy.
Over the years, I have since discovered that my experience is not unique and that many Nigerians shy away from paying for insurance. The result is that less than 1% of Nigerians have any form of insurance. But a new startup hopes to change this.
Meet Unyte, an insurtech startup that wants to drive insurance adoption using partnerships.
From my introduction, there are a few things to note about Nigeria's insurance industry. With less than 1% of the country's residents having some form of coverage, one can deduce that it is not a popular option for many people. But why is that the case?
One of the major reasons is poverty. 133 million Nigerians (63%) live in multidimensional poverty. For these individuals, an insurance policy is hardly a priority.
A Daily Sun report quotes a respondent as saying, "People must eat first before talking about taking [an] insurance policy. Remember, a hungry man is expected to be angry, so talking to a man who is simultaneously hungry and angry about insurance makes no sense, because he won’t understand anything."
Assuming you're able to get past the issue of poverty, the next challenge you'll be faced with is the negative perception many have about insurance companies. Older Nigerians speak of the difficulties associated with getting their premiums paid and pass on this distrust of the system to their children.
The other reason for the low insurance penetration in the country is its religious nature. At least 97% of the country's citizens identify with Christianity or Islam, and it is a common joke that your biggest competitor is the "blood of Jesus," a reference to the penchant of Christians in the country to use the phrase when in danger.
There's also the unspoken belief that buying insurance means one expects a negative occurrence, while the high probability of getting through the year without needing insurance means many people would rather spend their money on something else.
So, why did Fortunate and his co-founders decide to build an insurtech product?
Here, we turn to an event from several moons ago. After getting involved in an accident, the owner of the car, in a manner uncharacteristic of drivers in Lagos, offered to let him use his car until it was fixed.
He even informed him that his insurer would cover the cost of fixing both cars. Not only did their cars get fixed, but the insurer invited Fortunate for a health check. That was his first serious interaction with Nigeria's insurance sector, but he would not start Unyte until much later.
While brainstorming business ideas with his friends, Nelson Okpalachukwu and Femi Laniyan, Okpalachukwu mentioned insurance. The group laughed at the idea, but it reminded Fortunate of his previous encounter. His next line of action was to speak to other people who were knowledgeable about the insurance industry, and their response was encouraging.
How Unyte delivers its services
The conventional insurance model has one party who does everything from customer acquisition to service delivery, but Unyte is doing it differently.
Using its APIs, it connects to banks and insurance institutions across the country, enabling it to tap into an existing user base of individuals who are both financially included and use smartphones. In the future, it plans to connect to other digital service providers to make insurance more accessible.
According to Fortunate, the first step is to make it easy for people to get insurance wherever they are before turning the focus to making them get insurance.
"We look at people's everyday lives, and there's insurance that can be plugged in, but we see that most insurance companies want to be standalone. Today I don't have an insurance app, but talk to someone, and they probably have five or six banking apps. That's the idea. We're like, if you won't download these insurance apps, let's put the insurance in the apps you already use," Fortunate said on a recent call with Techpoint Africa.
So far, Unyte has closed partnerships with five insurance companies, including AXA Mansard, Leadway Assurance, Tangerine, Sovereign Trust, and Heirs Holding. These partnerships provide it with APIs, which it can then deploy to its banking partners. By the end of 2023, it plans to integrate its APIs with ten banks in Nigeria. Five banks have already signed up, with the first expected to go live in May 2023.
Unyte's competitive landscape
Although Nigeria's insurance penetration levels are low, there are many insurance companies that already play in the space. Startups like ETAP and Pay-U have also launched in the last two years as they try to get a piece of the pie, but Fortunate does not see them as competitors.
As he says, the existing players need to have a significant market share for any suggestion of competition to be considered.
"For you to compete, it means that everybody has a good market share. There's no competition for now because insurance adoption in the country is still very low. We're all trying to make people think of insurance in the first place."
Unyte's B2B2C model sees it connect all necessary parties, earning a commission for every sale it facilitates. With a broker's license, its commissions range between 5% and 30% of the value of the insurance product.
Still, its success lies in its ability to satisfy two distinct groups with different needs. For example, its insurance offerings need to fit nicely into its partner applications in a way that does not intrude on a user's experience.
Its partners (insurers and digital service providers) also need to be managed properly to ensure everyone's needs are met, but Fortunate is not worried. This, he says, is because the team has spent the better part of a year interfacing with all the necessary parties to design a solution that works for them.
Fortunate mentions its decision to collaborate with existing insurance providers as a major differentiating factor. By partnering with them, he points out that they can leverage their combined experience to provide excellent services to users.
"We push the insurers out there. Most of our competition position as insurers themselves, so they appear to be competing with the insurers that are backing them. In our own case, we understand that when two people tell a story, it's better than when one person says the same thing. We work with the insurers to put them out there, so they're comfortable knowing that we are not starting with them with the intention of hijacking their business down the line."
Managing the demands of all parties involved could pose challenges, with financial institutions often offering poor customer service. However, Fortunate believes that knowing there are alternatives could incentivize their partners to offer excellent service. He also discloses that Unyte intends to offer support to users at every stage of the insurance process.
Looking to the future
Over the next three years, the startup's growth plan is focused on onboarding as many financial institutions as possible. It also plans to target students in tertiary institutions. Fortunate hints at tapping into the growth of fintech startups in Nigeria.
"For this year, we have a target of 10 banks. It could be more, but we want these 10 banks to have insurance on their platforms, so that we can then start to drive insurance adoption as a team. So it's not just us; it's us, the insurer, and the bank. Now it's three people trying to speak towards one thing as opposed to when it was just the insurer."
After getting banks on board, the priority will turn to educational insurance. Fortunate says Unyte plans to protect students who lose their guardians during the school year and ensure they stay in school.
"We want every fintech coming in to roll out insurance. We want to get to that point. And then, after that, we want to tackle education. We want to guarantee the education of everybody in Nigeria. It's possible because we have packages that can do that, there are APIs for it, and most insurers keep innovating to make it work."
On the surface, Unyte's game plan could help drive insurance adoption in Nigeria. Most of the country's Internet users do so through a smartphone, and the number is expected to exceed 140 million by 2025.
Furthermore, there are more than 57 million people with bank accounts, and digital banking services have been growing even for incumbents. Still, the challenges pointed out earlier remain, and simply making insurance more accessible may not solve them.