The continent without a backup plan

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Two weeks ago, thousands of families in Maiduguri, a city in Northern Nigeria, woke up to a disaster.

A dam had suddenly burst, releasing a flood that swallowed homes and displaced people faster than they could say “life jacket”.

By week’s end, hundreds were dead, 400,000 people were homeless, and acres of farmland were destroyed.

The deeper tragedy? None of them were insured—not their lives, homes, or farms.

For these families, the only safety net is government aid and charity.

But Maiduguri’s story isn’t a one-off tragedy.

It’s a familiar story in Africa, where people are left alone when life takes a turn for the worse.

Africa has no insurance

Insurance is a cushion against bad events - whether it’s an illness, a car accident, or even death.

When your car breaks down, you get coverage to fix it.

When a health crisis hits, you get support.

And when you die, your family gets a payout to soften the blow. (Not the best exit strategy but hey.)

But for most Africans, that cushion doesn’t exist:

• Only 3% of Africans have insurance

• 10 countries make up almost 90% of Africa’s insurance market, and honestly, 70% of it is South Africa

• If you leave out South Africa, only 1.12% of Africa has insurance

That’s almost an entire continent without a backup plan.

This comes with unique problems.

Poor families, like those from Maiduguri, are pushed deeper into poverty by one flood disaster.

— Businesses struggle to get on their feet after a break-in or fire attack.

And people pay for healthcare out of pocket, making them even less likely to use it.

But Africa’s lack of insurance isn’t for lack of effort

In 2005, Nigeria launched the National Health Insurance Scheme to provide health coverage to all citizens.

Today, less than 5% of Nigerians use it. That’s like throwing a free party and no one shows up.

In Kenya, nearly half of the 15 million registered members of NHIF - the health insurance scheme - are dormant.

Despite the best efforts of African governments, insurance never really took off.

Globally, $7.1 trillion in insurance premiums were paid last year.

In Africa, it was only $90 billion - barely 0.1% of the global market.

So, why is African insurance a blip on the global map?

1. Insurance costs money that Africa doesn’t have

The more disposable income a country has, the more people buy insurance.

It’s why richer countries like South Africa have insurance rates of 16%.), while Ghana is at 1.2%.

In poorer countries, insurance is an afterthought.

In Sub-Saharan Africa, the poorest 20% of households spend up to 69% of their income on food.

And when the choice is between eating and buying health insurance, dinner wins every time.

2. It’s too hard to access

Getting insured is not as simple as sending a bank transfer.

For payments, Africa has neobanks, digital wallets, and POS agents.

But insurance has way too many steps to getting value.

You sign up with an insurer, go through background checks, and pay monthly premiums.

And if the thing you’re insured against happens, you get a payout.

But that’s if you can prove you’re not faking it.

These payouts often drag out for weeks and even months.

So, it’s hard to trust that it’s even worth paying for.

3. Most Africans work in the informal economy.

Nearly 83% of all employment in Africa is informal.

These are people who don’t work in a 9 to 5 or earn a fixed salary.

Think plumbers, traders, and cab drivers.

But insurance premiums are a set monthly fee, so if your income isn’t set in stone, paying insurance never becomes a habit.

Tech is giving insurance a new face

Africa’s insurance industry used to be an exclusive club.

The top 10 insurers in Africa have been around for decades.

Names like Sanlam, Africa Re, and Leadway.

These companies are slow, analog, and barely reach the bottom of the pyramid.

But startups are coming up - reaching more people and giving insurance a new face.

Like Turaco.

Turaco takes insurance directly to the low income earners who need it the most.

For an average of $2 per policy, their users can get insurance on different products.

You can sign up and buy your first insurance policy in minutes.

And while traditional insurers pay out in a month, they process claims in three business days.

In their first year, Turaco insured 40,000 people, showing how impactful smart pricing can be.

Last week, they teamed up with Autochek, the Nigerian car financing startup, to offer flexible car insurance to Autochek’s customers in Kenya.

And Africa has many more of these startups:

• MTek is letting Kenyans buy insurance and file claims through WhatsApp

• OKO is helping farmers insure their crops using mobile money

• WiAssur allows its users in Cote D’Ivoire to compare different insurers

• And Curacel is helping African insurers fight shady claims with AI

But it needs more

Africa’s insurtech revolution is on, but it needs simpler products with simpler pricing and a simpler experience.

It’s the only way to change the view that insurance is costly, out of reach, and a luxury for the few.

One startup reinventing the playbook is Pula.

Roughly 80% of Africa’s food supply comes from small farmers who have a 90% chance of losing their crops to pests and drought.

Pula helps these farmers insure inputs like seeds and fertilizers.

Then, they use satellite data to advise them on rainfall to boost their yield and income.

How it works?

• Farmers sign up with Pula and get their seeds from a partner supplier

• Inside the seed packet is a card with a number on it.

• The farmer texts the number to Pula and their farm gets remotely tagged and monitored for rainfall

• If there’s no rain for too long, their seeds get replaced

The value is immediate and costs them nothing.

So far, Pula has signed up 4.7 million farmers across 17 countries.

And they’ve paid out $6.9 million to 154,000 farmers.

But here’s the catch: Pula is just the beginning.

Africa’s insurtech revolution won’t be powered by one startup alone.

It’ll take more startups, more partnerships, and unconventional leaps.

If more insurtechs rip up the traditional playbook, and rethink insurance from the ground up, we might finally see it go from a luxury to a necessity on the continent.

And when that happens, there won’t just be better protection for Africa’s farmers, but for everyone - including disaster victims like in Maiduguri.

What do you think African insurance needs to take off?

Let me know here.

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