Africa’s insurtech sector remains a landscape of partnerships and workarounds, with startups relying heavily on alliances to navigate the labyrinthine regulatory frameworks across the continent. But in Egypt, a recent regulatory shift has signaled a potential disruption to this status quo, presenting an intriguing case for innovation in insurance.
The Financial Regulatory Authority (FRA) of Egypt recently issued Resolution №267 of 2024, amending prior regulations to enable insurance companies to issue and distribute select policies electronically. While this may sound like bureaucratic tinkering, it represents a significant leap forward. This regulatory nod to digital transformation aims to promote financial inclusion and enhance the insurance sector’s efficiency — an ambitious goal in a country where insurance penetration remains modest.
Egypt’s decision is steeped in pragmatism. Some policies, the regulation argues, don’t require exhaustive physical inspections to calculate premiums. By embracing automation, the FRA seeks to eliminate unnecessary bottlenecks while maintaining oversight — a delicate balancing act for any regulator. The agency’s broader goal? To digitize insurance and improve accessibility for millions of Egyptians, paving the way for more policies to follow suit.
However, amid the optimism, skeptics might wonder: Is this a step toward genuine disruption or just an incremental improvement dressed as innovation? If history is any guide, Egyptian regulators are not known for rapid pivots.
While the FRA lays the groundwork, Egyptian fintech behemoth Fawry is already sprinting ahead. Fresh off issuing more than 700,000 digital insurance policies, Fawry has unveiled “Your Health Fawry,” a fully digital medical insurance solution developed in collaboration with GIG Insurance. Accessible via the “My Fawry” app, this product targets Egypt’s underserved population, offering inpatient coverage up to EGP 25,000 (USD 514), discounted medical services, and free telemedicine consultations.
This move is not just a business pivot; it’s a strategic chess play. By leveraging its massive user base and prepaid card system, the company simplifies enrollment, eligibility verification, and access to services. Partnering with healthcare heavyweights like Nile Radiology and Dawy Clinics, the product exemplifies Fawry’s strategy to dominate the insurtech space while driving financial inclusion.
But while Fawry’s achievements are laudable, they also underscore a lingering truth about African insurtech: the market is still tethered to partnerships. Fawry’s success owes much to its collaboration with established insurers and healthcare providers — a strategy that, while effective, raises questions about the scalability of such models in markets less cooperative than Egypt.
Across the continent, partnerships are not a luxury but a necessity. For startups like Nigeria’s ETAP, acquiring operational licenses remains a monumental hurdle. ETAP recently secured Ghana’s ‘first-ever’ (sandbox) insurtech license through its partnership with Hollard Insurance, enabling it to offer innovative auto insurance solutions. Similarly, Kenya’s Turaco sidestepped costly licensing requirements by securing a micro-underwriting license, enabling it to sell ultra-low-cost policies starting at just UGX 1,000 per month.
For many African startups, the regulatory barriers are insurmountable without alliances. Acquiring a full insurance license in Kenya, for instance, costs around $6 million (in Nigeria about $360,000), a figure that forces most insurtechs to seek alternatives like micro-insurance or web aggregator models. These creative alternatives show promise, but they also highlight the sector’s reliance on niche solutions rather than systemic change.
Even corporate giants are not immune to this reality. Safaricom, East Africa’s telecom behemoth, recently secured brokerage and agency licenses to sell third-party insurance products — a clear acknowledgment that becoming an insurer outright is not worth the capital and regulatory headaches.
“We operate as insurance agents rather than a direct insurer. Obtaining an insurance license would require significant time and capital,” explains Simon Schwall, founder and CEO of OKO, an agricultural insurance provider active in Mali and Uganda.
Despite the obstacles, Africa’s insurtech sector has shown promise. Regulatory sandboxes, like Ghana’s, have allowed startups to test products under supervision, fostering innovation. While the sandbox initiative is laudable, it also underscores a conservative approach. Regulatory sandboxes are a foot in the door rather than a revolution. For a market with immense untapped potential, one might wonder if the Ghana’s cautious optimism is enough to truly disrupt the status quo.
Across the continent, programs like FSD Africa’s Bimalab, are leading voices for insurtech policy changes. FSD Africa’s Bimalab, for instance, has catalyzed over 100 Insurtechs across 16 countries, raising $35 million in capital. Yet, according to Partech Africa, insurtechs received a paltry 3% of equity funding in African startups in 2023, highlighting the sector’s uphill battle for investor attention.
Egypt’s regulatory shift could serve as a model for the continent, especially if its digitization efforts expand beyond car insurance, as it currently stipulates. Yet, skepticism lingers.
In Nigeria, the recent Insurance Web Aggregator License introduced by the country’s National Insurance Commission (NAICOM) provides a lifeline for startups keen to circumvent exorbitant licensing fees.
However, this workaround also speaks to the larger issue: why must innovation crawl when it could run? Nigeria’s proposed insurance reform bill, which slaps a fine of ₦25 million ($14,767) on unlicensed operators, exemplifies the regulatory stick without offering much of a carrot.
For now, Africa’s insurtech players must navigate a patchwork of regulations, prohibitive licensing costs, and fragmented markets.
