Back in 2005, Bill & Melinda Gates Foundation believed in a small but promising UK-based organisation hell-bent on providing insurance protection to poor people in Africa. These were the early days before what is now known as Microinsurance was cool and trendy. Take my word for it. It was not just a verbal belief, Bill and his now ex went £25 Million deep and young Richard Leftley was off to the races!
At MicroEnsure’s driving seat and a warm grant cheque in his pocket, as is the dream of every entrepreneur, Richard went all out with his dream of insuring the poor across Africa and Asia. Through its genius, as it were, MicroEnsure would revolutionise how insurance is offered to the underserved. Breaking traditional rules, creating new ways to build insurance products, and inventing new distribution channels, MicroEnsure was for sure the company of the future!
The organisation went on to win more grants, investments and partnerships for distribution. What put them on the global map and in all sincerity the Insurance Hall of Fame was their genius partnership with telecommunication companies. These multiple partnerships allowed them to access millions of customers all at once by offering either, free or subsidized low-ticket insurance packages which would last utmost for a month subject to renewal conditions. This allowed millions of people across Africa and Asia to taste and appreciate insurance, and hopefully transition them to fully-paying customers, genius right!?
In Africa, headquartered in Nairobi at the time, their biggest partner was Airtel with whom they had partnered in over 10 countries! One of my favourites was in Zambia where, Richard brags, deservedly, that they insured more than 1 million people in one night! Raising the insurance penetration in that country to 16%, again, in one night! They did this by opting-in everyone who was using a pre-determined airtime threshold the previous month. Cost borne by the telco – call it a promotional budget. The idea was, once claims such as hospital bills were paid, it would create believability, people will know that insurance works and can then buy the insurance out of their own pockets. ‘No one wakes up thinking about insurance, but everyone wakes up worrying about risks’ Peter Gross, then in charge of Africa would often say.
In a span of 10 years, MicroEnsure saw tremendous success, replicating the same model across markets and industries through partnerships with Banks, Microfinance, NGOs etc and in later years tech companies. However, as time went by, it became difficult to justify the freemium model to those who were bearing the upfront cost, the partners. The conversion rates from freemium to paid fell below expectations. As a result, these partnerships started to fall through which forced shutdowns in countries where they had only that one telco partner. This meant closing offices and letting people go. Countries that survived, at first, were those with a diversified client portfolio.
By 2020, MicroEnsure was only operational in two countries in Africa, Kenya and Ghana with just but a very small and largely inexperienced team, as most high-ranking executives in Africa had either left or been let go. With Investment and revenues becoming scarce, MicroEnsure made a strategic decision to be acquired by US/UK Reinsurance company and rebranded the fusion to ‘The Microinsurance Company (MiC)’ led by Harry Croydon. Richard stepped down as CEO to Executive VP & Co-Founder and for a few months, there was a wave of new hopes and belief that the company would relive its former glory. Around the same time, MiC was engaged in a protracted application with the Insurance Regulatory Authority (IRA) to become a Microinsurance Underwriter (Risk Carrier) but these efforts bore no fruit as their application was never approved -reasons best known to the IRA.
In 2022, in unclear circumstances, at least to the public eye, the visionary, the maverick, the founder of MicroEnsure stepped down, again, from day-to-day operations and assumed a part-time advisor to the board role and in a surprise announcement declared that he was starting a new Venture, Wavu – a consulting firm in Microinsurance. Aside from Wavu, Richard also took up new roles with the IFC, ARK Venture Studio and non-exec directorship in several startups, many in Africa.
Had Richard given up on his dream? Did the new acquisition not align with his vision? Was he pushed out? The answers to these questions remain unclear. We can only wish him well with what he’s building at Wavu and hope that his dreams will come true!
Both from within and without it was clear that something was not cooking right at the new merger – the iceberg couldn’t have been far away. In 2023 a few weeks ago, news broke that MiC was shutting down the only two remaining offices in Africa, Nairobi and Accra. Winding down the Nairobi office and selling their Ghana business. The once Muhammad Ali of Microinsurance that was disrupting the insurance market is hanging his gloves, at least from the African side.
The biggest beneficiaries of the spoils are insurtechs like Turaco whose founders are ex-MicroEnsure employees as it says on their LinkedIn profile and public pitches. This American-led entity which seems to operate on a Ctrl C and Ctrl V business model from their former employer is in full action with a couple of top-notch investors backing them. But the big question remains, is Turaco operating where MicroEnsure was 20 years ago? Is their eventual debacle Imminent? We cannot say for sure.
But what I do know is that we need to do more than offer Hospicash, PTD and Funeral benefits the same thing we offered 20 years ago. It is on record, from Emerging Markets’ research that this is not enough.
If a heavily funded startup in Microinsurance like MicroEnsure operating in Africa has faced such woes, what can we do differently to avoid the same fate? The answer surely can’t be copy-pasting, right!? There are a lot of positive lessons we can pick from Richard’s and MicroEnsure’s journey in general, but what does the future of Microinsurance look like? What does the future of Crop Insurance and startups like Pula and Acre Africa, whose business model still rely heavily on subsidies look like?
Is this the time for a new, different approach towards Microinsurance? Is it time for a fresh perspective? Is this the time to believe more in local entrepreneurs who understand the problem that Africa faces better? Your guess is as good as mine.
I do not possess all the answers but I do think it is high time we have this debate on what we see to be the future of Microinsurance in Africa.