Only 21% of the 12 million registered vehicles on Nigeria’s roads have genuine motor insurance, while the rest either have false certificates (owners are usually unaware) or are not covered at all.
This report also states that a number of car owners who have genuine insurance also fail to renew it when it expires, a violation of the law in Nigeria, which requires every vehicle to be covered by insurance. All of these challenges stem from the fact that most trades in the industry are still done manually and mostly through agents, compounding the problems.
To bridge the gap, insurtechs like Etap have sprung up in recent years in Nigeria and across Africa to facilitate the process of buying insurance and submitting claims. Etap claim to enable motor vehicle owners to purchase insurance in 90 seconds and complete claims in three minutes.
The startup is now on an expansion drive in the West African country after pre-seed funding of $1.5 million in a round led by Mobility 54; the venture capital arm of Toyota Tsusho and CFAO Group.
“We have great products and excellent value propositions. But we know that the products and value proposition can be bigger and that’s why we looked for partners that we have now. Our plan is to have the most preferred insurance products and grow and scale this across Africa. I feel we are perfectly positioned to achieve that,” Etap founder and CEO Ibraheem Babalola told .
Tangerine Insurance, also the underwriter of Etap, Graph Ventures, Newmont and several other angel investors took part in the round.
Babalola started building Etap last year, frustrated by the complexity and delays in buying insurance. In his own words, he wanted to make buying insurance and claiming as easy as taking a photo – hence the name Etap.
“The idea itself comes from a frustrated customer; my insurance was going to expire and i wouldn’t be notified to renew it…I always had to call a guy who would help me renew it. I thought there was a way to do better,” says Babalola, adding that policyholders receive notifications when their coverage ends and can also opt for automatic renewal.
Babalola, who has experience building and helping financial services and proptech startups to scale up, previously worked with a director of a top insurance company in Nigeria, sparking his interest in the sector.
“Nigeria has one of the riskiest environments in the world and an insurance penetration of less than 2% – that relationship is insane because the higher the risk, the greater the tendency to want to protect yourself from events; but in Nigeria and the rest of Africa this is not the case. This has to change,” Babalola said.
He added: “Having all these experiences of being on both sides; being a customer and being close to the operator and having experience building startups; I thought it was important to rethink insurance – to improve the offer, the way people access it, reimagining the user experience – to make it more flexible and transparent – building trust and giving people more value.”
The startup launched the beta version of its app in November last year, allowing people to buy insurance based on their needs; per trip, daily, monthly or yearly. However, making the process simpler and more flexible is not the only driving force behind Etap’s growth; the startup also aligns the price of its products with the driver’s driving habits. 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 number 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 at sign-up) and post-accident assessments, all based on images. To prevent fraudulent claims, the app comes with geolocation tags, timestamps, and other features like crash notifications.
Yumi Takagi, Project Manager of Mobility 54, said: “Etap is addressing many challenges affecting the automotive experience in Africa, and we are excited to support and work with them to bring their innovation to more drivers across the road. across the continent. We believe that ETAP will play this important role and revolutionize the motor insurance industry with their powerful technology.”