In Africa, one startup is carving a niche for itself. By way of using APIs, Root is helping businesses and developers launch insurance products faster than the traditional way. The company, based in South Africa, has raised $3 million in seed funding to scale outside the country and build the infrastructure for the global digital insurance economy. Venture capital firms Invenfin, Base Capital, Savannah Fund, P1 Ventures, Luno and FireID took part in the round, including some high-impact angel investors. Root started off with the premise that many barriers, including compliance and capital, prevented software developers and businesses from building and innovating around insurance. Root’s first product was programmable bank accounts and cards, but it has moved on to providing insurance APIs which is now its core offering. Root plugs on top of insurance companies, who underwrite the products that developers and business analysts, using Root, build and integrate into their existing customer experiences, which can exist on a website, chatbot or a mobile application.
The five-year-old company primarily targets non-insurance companies with a steady client base; businesses offering insurance as a secondary product. For instance, telcos, retailers, and banks. However, it also powers affinity insurance players; some of the largest in South Africa actually. Some of these clients include Mr Price Money, FinChoice, Telkom, Metropolitan, Sanlam and Guardrisk. With Root’s insurance infrastructure, these companies have processed millions of policies and thousands of claims each month. The South African company makes money through subscription licensing fees based on its client’s size and complexity of their needs. In addition to helping developers and businesses launch insurance products, Root provides channels for these businesses to reach more customers and takes care of compliance issues. With the new funding, Root intends to roll out its flexible low-code digital insurance platform as it expands to other markets, Europe. Hopley does not mention the countries Root will expand into; however, judging by the level of insurance play in the region, the U.K., Germany, and France might be at the top of the list. While Root has plans to hire more technical and business talent in Europe, Hopley says a large part of the company’s team will remain in South Africa.