Casava, a Nigerian digital insurance company has today raised $4 million pre-seed round. This funding is the largest pre-seed for an African insurtech company and the second largest for a Nigerian startup after Nestcoin whose round was declared only yesterday.
The pre seed round was led by a Berlin-based Target Global with participation from foreign VCs and angel investors like Entry Capital, Oliver Jung, Tom Blomfield, Ed Robinson and Brandon Craig. Other participants include Uche Pedro, Babs Ogundayi, Musti Mustafa, Shola Akinlade, Olugabenga “GB” Agboola, Hani Ogundayi and Opemi Awoyemi who are all founders and local investors.
Africa is still lagging behind in terms of social security and protection programs when compared to Europe and America, where the government provides health insurance and unemployment benefits for her citizens. Insurance is seen as one of the elitist privileges for the privileged few on the continent and this has impinged on the penetration rate in almost all the African countries, except South Africa – McKinsey Study of 2018, pegged the African insurance market at a 3% penetration rate; Excluding South Africa, it was 1.12%, with only 1.9% of Nigeria’s adult population had a form of insurance policy as of 2018.
Casava was launched by the duo, Bode Pedro and Olusegun Makinde in April 2021. Pedro has gained relevant experience in the insurance industry with VisaCover, an insurance brokerage company where he resigned from in 2016. He got the idea for Casava when VisaCover provided an alternative in the auto insurance market by allowing drivers of Uber, which was one of its partners, to make weekly insurance payments instead of quarterly or yearly payments insurance partners before it operated.
Pedro in a chat with TechCrunch said, “We saw mass adoption and knew the market needed insurance payments to be broken down. But then we noticed that as brokers, we didn’t have full control about that process and we weren’t giving people the best experience,”
“We knew if we were going to take insurance to the next level, then maybe we need to control that product and be involved in product end-to-end,” he said.
Pedro also gave reasons for the low penetration of insurance policy in Africa to include the over confident on the part of the populace largely due to region.
“For insurance, it’s about negative outcomes, which Nigerians and human beings, in general, don’t like to think about. Even if they think about it, they clear it in their head. So the key to success in insurance is to hack behavior with your product. How do you make your product attractive?” he queried.
How Casava Works
Consumers can subscribe to Casava’s insurance products directly via the website, mobile app or WhatsApp, they are given a month-free trial with an option to opt-out if they did not like the service. However, should they continue they would be provided with value-added services such as executive coaching, telemedicine and job services.
Casava currently provides cover for health and job loss. According to the company, subscribers can insure their income from $1 (~₦500) monthly, and get paid monthly for six months if they lose their job, become sick or disabled.
“It’s been a successful product. We’re scaling it well and people are like, ‘I didn’t even know you could do this.’” We’re seeing workers trying to buy for their employees; even lenders are looking to get their borrowers to buy it.”
Subscribers can also use its Health Insurance product and access more than 1,000 doctors on telemedicine and 900 hospitals across Nigeria. There’s also HealthCash, which lets users get reimbursed when they visit the hospital for specific periods, all for $0.5 – $0.6 a month.
Casava works with reinsurance partners who guarantee a refund when claims are paid as a licensed microinsurance underwriter. That’s how it makes revenue asides from profit — off subscription fees. The company says it already has more than 66,000 customers, with $16 million in insurance coverage.
How the Company Plans to Utilized the Fund
The funding will support more product launches from life and travel insurance to home and smartphone insurance. “We have delivery insurance, logistics insurance, I mean, it’s fascinating what we’re doing and the idea is that it’s one subscription with flexible payment options,” said the CEO.
Casava would also use the investment for customer acquisition, growth and developing its product and technology stack. He added. The insurtech company plans to work with fintech and digital partners to include insurance products in their offerings, with this it hopes to gain access to over 500,000 financial service agents to reach millions of uninsured customers nationwide and keep them out of poverty.
“I think that if you have millions of people that are insured, you reduce the situation where people go into poverty. If one is crawling out of poverty and something unfortunate happens, which is almost inevitable, they go back into poverty because they were not insured,” Pedro stated. Right now, only 2 million people have active policies in Nigeria, and if we do what we’re supposed to do, it’s going to be something compelling for Nigerians, and hopefully, Africans.”