Only 21% of the 12 million registered vehicles on Nigerian roads have genuine car insurance, with the rest having fake certificates (owners usually don’t know) or not being covered at all.
This report also indicates that a number of car owners with genuine insurance policies also do not renew them when they expire, a breach of Nigerian law, which requires every vehicle to be covered by insurance. All of these challenges stem from the fact that most transactions in the industry are still done manually and, more often than not, through agents, further compounding the problems.
To bridge the gap, insurtechs like Etap have emerged in recent years in Nigeria and across Africa, to ease the process of buying insurance and making claims. Etap claims to enable motor vehicle owners to purchase insurance in 90 seconds and file claims in three minutes.
The startup is now expanding across the West African country following a $1.5m pre-seed funding round in a seed round led by Mobility 54, the arm of venture capital from Toyota Tsusho and the CFAO group.
“We have great products and great value propositions. But we know that the products and the value proposition can be more important and that’s why we have been looking for partners that we have right now. Our plan is to have the most popular insurance products and to develop and expand them across Africa. I think we are perfectly positioned to achieve this,” Ibraheem Babalola, founder and CEO of Etap, told TechCrunch.
Tangerine Insurance (also an Etap underwriter), Graph Ventures, Newmont and several other angel investors participated in the round.
Babalola started building Etap last year, frustrated with the complexities and delays of buying insurance. In his own words, he decided to make buying insurance and making claims as easy as taking a picture – hence the name Etap.
“The idea itself comes from being a frustrated customer; my insurance would expire and i would not get a notification to renew it… i always had to call someone who would help me renew it. I thought there was a way to do better,” Babalola said, adding that policyholders receive notifications when their coverage expires and can also opt in for automatic renewal.
Babalola, who has experience building and helping scale financial services and proptech startups, previously worked with an executive at a large insurance company in Nigeria, which aroused his interest in the sector.
“Nigeria has one of the riskiest environments in the world and insurance penetration of less than 2% – this relationship is crazy because the higher the risk, the greater the propensity to want to protect against events; but in Nigeria and the rest of Africa, this is not the case. This has to change,” Babalola said.
He added that “Having all these experiences of being on both sides; being a customer and close to the operator, and experience in building startups; I thought it was important to reinvent insurance – to rethink the offer, the way people access it, the user experience – to make it more flexible and transparent – building trust and giving more value to people.
The startup launched the beta version of its app in November last year, allowing people to purchase insurance based on their needs; per trip, daily, monthly or annually. But making the process easier and more flexible isn’t Etap’s only growth driver; the startup also adapts the price of its products according to the behavior of drivers. They have also gamified the products as customers earn and redeem points based on their history.
“With our retail distribution, you are profiled based on a set of data points that place you in a risk class,” he said.
The startup’s end-to-end services also include pre-loss inspection (done during registration) and post-crash reviews, all of which are image-based. To avoid fraudulent claims, the app comes with geolocation tags, timestamps, and other features like crash notification.
Mobility 54 Project Manager, Yumi Takagi, said, “Etap is addressing many challenges that impact the automotive experience in Africa, and we are excited to support them and work with them to bring their innovation to more. drivers across the continent. We are confident that Etap will play this important role and revolutionize the auto insurance industry with its powerful technology.