Insurtech startup Root raises $1.5m for expansion

BREAKING NEWSSeptember 29, 2023 at 12:18 PM UTC

South African startup Root Platform, the low-code, API-first, end-to-end insurance technology platform provider, has raised $1.5 million in funding to accelerate its expansion plans.

Founded in 2016, Root is an end-to-end insurance platform that helps companies build, sell, and manage digital insurance products in Africa, the UK, and Europe. The startup packages the “hard things” in insurance behind easy-to-use APIs, allowing any company to build and deploy new insurance products themselves.

Root first raised an external round of funding from investors in 2021, and one of those investors, South Africa-based Invenfin, the venture and growth capital arm of Remgro, has now invested a further $1.5 million. The company will use the funding to accelerate its plans to expand in the UK and Europe.

Key Takeaways

Insurance in Africa remains a marginal product. Penetration across the continent, at 3%, is half the world average as a percentage of GDP. If South Africa, Africa’s most insured market is excluded, that number drops to a dismal 1.12%. More so, premiums per capita are 11-fold lower than the global average, according to a McKinsey study in 2018 that compared six insurance regions on the continent. Low insurance uptake in Africa is largely due to the traditional distribution of insurance policies, which rely on brick-and-mortar channels to sell and process policies. This takes a long processing cycle and has poor customer satisfaction and higher distribution costs. While this is a major problem, it also leaves room for innovation. The rapid expansion of digital and mobile services has brought along with it the transformation of insurance services in Africa with insurtech (insurance + technology) startups leveraging technology to overcome the historically low penetration rates of insurance products across the continent.