FSD Africa has announced plans for a new $25–30m venture fund aimed at early-stage African insurtech startups, as the organisation doubles down on efforts to expand insurance access across a continent where penetration remains below 3% in most markets.
The Inclusive Insurtech Investment Fund (3iF), unveiled at the BimaLab Africa Insurtech Summit in Nairobi today, will target startups building products for climate resilience, health, and financial inclusion — areas where traditional insurers have been slow to innovate despite rising risk exposure.
Africa’s insurance protection gap continues to widen. Roughly 80% of economic losses from natural disasters in 2022 were uninsured, according to FSD Africa — a sharp jump from 58% the previous year. With climate shocks intensifying and extreme weather events becoming more frequent, demand for affordable risk protection is growing faster than the continent’s insurance markets can respond.
A blended structure to pull in private capital
The 3iF vehicle is expected to launch in January 2026. It will use a blended-capital structure:
– junior equity from catalytic investors, anchored by FSD Africa Investments (FSDAi), and
– senior equity from commercial and strategic players including regional reinsurer Zep Re.
The structure is designed to derisk early-stage investments and attract private investors who have historically avoided Africa’s insurance tech sector due to long product cycles and complex regulation.
3iF will also serve as a scale-up pipeline for startups graduating from BimaLab, FSD Africa’s accelerator programme that has supported 135 startups across 28 African countries since 2020.
“A new chapter for insurance innovation”
Speaking ahead of the summit, Kelvin Massingham, director of adaptation and resilience at FSD Africa, said the fund aims to unlock innovation for “millions across the continent” who remain excluded from traditional insurance products. “By investing in the next generation of insurtech pioneers, we are unlocking opportunities to expand access, affordability and resilience,” he said.
“By investing in the next generation of insurtech pioneers, we are unlocking opportunities to expand access, affordability and resilience,” he said.
Alongside the fund, FSD Africa and the Insurance Regulatory Authority of Kenya launched the Regulatory Sandbox Eligibility Assessment Toolkit — a framework designed to help African regulators evaluate new insurance innovations and decide which ideas to greenlight for sandbox testing.
Regulatory sandboxes have become a critical gateway for insurtechs building products in highly regulated markets. But many regulators lack clear criteria for assessing applications, creating long delays and inconsistent decision-making.
Godfrey Kiptum, Kenya’s insurance commissioner, said the toolkit will help regulators better understand the potential impact of new models. “Building regulatory readiness for innovation is key,” he said. “This toolkit will be an invaluable resource for regulators across the continent.”
“Building regulatory readiness for innovation is key,” he said. “This toolkit will be an invaluable resource for regulators across the continent.”
Africa’s insurtech moment?
Insurance penetration in Africa remains among the lowest globally. The reasons are well-documented: limited distribution channels, low trust, lack of tailored products for informal workers and smallholder farmers, and minimal household disposable income.
Yet insurtechs are beginning to fill these gaps — particularly in microinsurance, climate-linked products and embedded insurance distributed through fintechs, mobility operators, and gig-work platforms.
Launched in 2020 by Kenya’s IRA and FSD Africa, BimaLab has positioned itself as a continental hub for this new wave of innovation. The programme offers technical assistance, regulatory engagement, mentorship and investor readiness training. It has also helped catalyse 150+ insurance solutions now reaching over 6m people across 28 countries.
Elias Omondi, principal of innovation for resilience at FSD Africa, said the challenge is no longer just distribution but capital.
“Africa’s protection gap is not just a market failure — it’s a capacity and capital gap,” he said. “By combining technical support with catalytic funding, we help insurtechs de-risk innovation and reach the millions who remain unprotected.”
Companies that have passed through BimaLab’s pipeline are beginning to scale regionally. One example is Turaco, a Kenya-founded microinsurance startup operating in Uganda, Nigeria and Ghana.
Co-founder Ted Pantone said the programme helped the company expand beyond Kenya and optimise claims management.
“We’re now insuring over 1m customers and processing more than 20,000 claims,” he said during the summit. “We are proof that the programme works.”
Why this matters
The launch of 3iF signals a shift in how development finance institutions are approaching insurance innovation in Africa. Rather than funding technical assistance alone, they are now deploying risk-tolerant capital to crowd in commercial investors — a model already used in fintech but far less common in insurance.
If successful, the fund could help insurtechs tackle structural issues that have long constrained the sector:
– high customer acquisition costs
– low data availability
– long product cycles
– underdeveloped regulatory frameworks
It could also accelerate the rise of climate-linked microinsurance, a segment that has gained urgency as droughts, floods and extreme heat increasingly destabilise African economies.
With climate shocks escalating and millions across the continent lacking any form of risk protection, the pressure on Africa’s insurance industry is intensifying. Incumbents have struggled to innovate quickly enough, opening the door for startups that embed insurance into payments, agriculture, healthtech and mobility platforms.
For these companies, early-stage capital remains the single biggest bottleneck. FSD Africa’s new fund — if deployed effectively — may begin to change that.