Rooting for Africa’s insurance industry 

Rooting for Africa’s insurance industry 

FinChoice – a sister company to HomeChoice – has launched a Personal Accident Plan using Root’s platform, with the aim of selling life insurance to its urban customer base. Here, Louw Hopley, Founder and CEO of Root, tells us more about how this partnership is benefitting both companies, as well as the current state of South Africa’s insurance industry. 

Root has joined forces with FinChoice, which is an SME, to launch a Personal Accident Plan designed specifically for South Africa’s tech-savvy, urban population. 
The new product, underwritten by Guardrisk, offers a lump sum of up to R50,000 for accidental death and permanent disability, plus an additional R2,000 which can be used for airtime, travel or groceries. 
Using Root’s InsurTech platform, FinChoice has been able to launch this insurance product faster and more efficiently. The speed to market has been cut drastically, and the system allows customers to be covered as soon as they sign up. 
Here, Louw Hopley, Founder and CEO of Root, tells us more about this partnership and how it has benefited the company and the insurance industry in South Africa.

Can you tell us more about Root and its mission?

Our mission is to turn large companies into innovative insurers. We help companies which are ready and motivated to enter the digital age and meet consumers where they are. We do this by building an insurance operating system – a platform that brings all the different insurance players together to work together easily, irrespective of which technology they already have.

What does your day-to-day look like at Root?

I am focused on the direction of the company and resolving any bottlenecks on that path. I try to wake up before 7am, read the news, go for a run and aim to be online around 8am. My workday usually starts with a check-in with Charlotte Koep – Root’s COO, who does an excellent job of keeping the rest of the business focused.

I generally keep my diary open as far as possible from recurring meetings to reduce distractions. This allows me to focus on the most important opportunities or problems. We have a hybrid remote work policy, but I prefer to be at the office to see the team in person because face-to-face water cooler chats are invaluable.

Why did you choose to partner with FinChoice?

FinChoice and its sister company, HomeChoice, are both highly innovative companies that take digital innovation seriously. These are the types of companies we love working with because they’re always wanting to raise the bar in the digital experiences and products they offer their customers. FinChoice’s digital Personal Accident Plan is an example of this and there will no doubt be more to follow.

Can you tell us more about your new Personal Accident Plan?

It’s FinChoice’s accident plan; our role was simply to make it possible for them to get all the different bits of the insurance product together. I say ‘just’ but it’s definitely not as simple as it seems.

There are lots of moving parts and that’s where our operating system comes into play, essentially absorbing a lot of that complexity to make it as easy as possible for FinChoice to launch the product.

The Personal Accident Plan is underwritten by Guardrisk and offers a lump sum of up to R50,000 for accidental death and permanent disability, plus an additional R2,000 which can be used for airtime, travel or groceries.
How has Root’s technology enabled FinChoice to launch this product quickly and efficiently?

The Root platform automates and takes care of many of the critical aspects of insurance, like compliance, reporting, billing, communication, etc., which enabled FinChoice and its underwriter to focus their attention on designing and delivering the product and experience they were looking for for its customers.

Contemporary insurance requires a large and complex network of people and technologies to work together effectively. You need underwriters to evaluate the risk and approve consumers’ applications for insurance cover; actuarial scientists to determine the risk profiles of individual and group customers (and what premium they should pay); claims adjusters to determine what should be paid out and insurance agents to sell and manage policies. That’s without getting into other functions such as reinsurers (who insure insurance companies), customer service and marketing. 

Plus, all of this infrastructure has to speak to banking systems to gather premiums and pay out claims. 

These roles are all more complex than has been outlined here, but it should be clear that it takes a lot for an insurer just to come into existence, never mind build the app that you use to insure your new fridge or claim when someone dings your car. 

Importantly, insurers also have to guarantee that every person and technology in that chain complies with the laws and regulations governing the industry. 

Fortunately, technology such as Root’s is reducing a lot of that complexity. Advanced technologies can highlight anomalies, limit permissions, access third-party data sources – and therefore the risk of internal fraud – and allow insurers to make sure all checks and balances have been addressed in processing claims.

For instance, an actuarial scientist is far more likely to program the algorithm that determines your risk profile than to do the calculation themselves. Artificial Intelligence (AI) and Machine Learning, meanwhile, easily filter out fraudulent claims. Your insurer is also likely to have an old mainframe server that houses massive databases, with the basic business rules of insurance hardcoded into the system. 

The best InsurTech platforms combine those functions and technologies seamlessly. 

How does this partnership demonstrate the ease with which branded entities can enter the insurance market?

The process took roughly two months from spec to go-live, which is unheard of in insurance circles. Usually, just getting the different databases to ‘talk’ to one another can take a year. Our API-based operating system resolves that problem from the get-go.

What advice would you offer key decision-makers looking to expand into the insurance sector?

First, think about what your customers want – this is the main difficulty when designing new products.

Once you’ve got that resolved, assemble your ecosystem of value chain partners, including underwriters, admin partners, etc. This is where a modern API-based insurance operating system can be extremely helpful, enabling each of these partners to seamlessly interact to deliver value to the final customer.

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