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[EDITORIAL] As FinTech gains ground, now is time to disrupt insurance sector



Insurance sector is notable for the business of property and casualty insurance and life assurance; that is, assessing risk, collecting premiums and paying claims. These haven’t changed much since the time of bottomry contracts that involved merchants of Babylon as early as 4000–3000 BCE.

Bottomry, according to the Britannica was also practiced by the Hindus in 600 BCE and was well understood in ancient Greece as early as the 4th century BCE.

Under a bottomry contract, loans were granted to merchants with the provision that if the shipment was lost at sea the loan did not have to be repaid. The interest on the loan covered the insurance risk.

Ancient Roman law recognized the bottomry contract in which an article of agreement was drawn up and funds were deposited with a money changer. Marine insurance became highly developed in the 15th century.

Coming home to Nigeria, the birth of modern insurance in here is closely associated with the arrival of British Trading Companies.

These companies facilitated inter-regional trade in the country. These foreign companies, therefore, needed to deal with some of their risks at a local level. This changed the shape of the insurance sector in Nigeria.

These trading companies were given insurance agency licenses by their foreign authorities from abroad. The licenses allowed the firms to facilitate claims supervision and issue covers.

In 1918, Africa and East trade companies inaugurated the Royal Exchange Assurance Agency. This was the first insurance company in the history of insurance in Nigeria. Other agencies included: BEWAC’s Legal and General Assurance, Patterson Zochonis (PZ) Liverpool and Law Union and Rock.

Well, recently, though, the insurance industry has embarked on a radical transformation, one spurred by a series of digital innovations whose widespread adoption is just a few years away.

And like Bain & Company and Google rightly identified seven key technologies, namely, infrastructure and productivity, online sales technologies, advanced analytics, machine learning, the Internet of Things, distributed ledger and virtual reality, that have already begun to disrupt the industry and whose impact will accelerate in the next three to five years.

These new technologies are likely to be a boon for consumers, bringing more choice, better service and lower prices.


In Nigeria, things may be slow, in comparison to other advanced climes, when it comes to technology, especially as it is obviously playing catch-up in the Fourth Industrial Revolution, (4IR), but the efforts to meet up cannot be ignored.

These efforts involve setting up different platforms, mostly privately driven such as the AI Learning, Research and Work Readiness Lab by Rise Networks and thehatch platform by Inlaks; hosting different forums for deliberation on what should be done concerning key areas, and the development and launch of startup FinTechs, among other strides.

Entrepreneur reports almost a third of the total funding on the continent was raised by Fintech start-ups in 2017, and 60% of all mobile money accounts globally can be found in Sub-Saharan Africa.

The FinTech sector is set to show strong growth over the medium term, from roughly $200 million in 2018 to $3 billion by 2020. The majority of these investments have been routed towards Kenya, Nigeria and South Africa. It is expected that success in FinTech in these countries will expand to other African countries, the report shows.

The above- report shows three things:

  • FinTech is a big deal in Africa and indeed Nigeria
  • Most of the FinTech solutions in Africa revolves around payments
  • Nigeria is one of the countries expected to influence Africa’s FinTech sector.

These three points set the premise of this Editorial.

Valid but old. What next?

Giving how much impact remittances from the diaspora have on our GDP, the queues and stress with traditional banking and the exponential growth of phone usage, it is no secret why most of the FinTech solutions are focused on payments, remittances and transfers.

To be fair, though, it is not just payments that the Nigerian FinTeschs offer. They offer loan services, saving platforms and investment opportunities. These services can and do help individual Nigerians get accountable in their finances, but the question to be asked is what next.

According to the Founder, GridCode, Squadron Leader Adefolajuwon Amoo, while speaking at the Nigeria Innovation Summit (NIS) 2019, if you notice a problem and you have a solution idea, first, search to see if there is already a similar solution developed for it. If there is, simply take it off the shelf and use instead of creating the same solution.

While the Co-Founder/CEO,, Bamiduro Adetayo gave ‘validation of a sector’ as an advantage of the same product or services being replicated and made available in different forms, we run a risk of leaving many problems unsolved by such replications when we can embrace innovation and solve other challenges.


Untapped and emerging

Beyond Payment gave a report on four areas where it foresees emerging activities for the African startup FinTechs.

It lists these areas along with reasons why solutions should emerge from these subsectors.

  • Agriculture finance – Farmers make up 70% of Africa’s workforce, but most farmers still have trouble getting the financing they need to expand. A new crop of entrepreneurs is helping farmers access credit and reach new markets.
  • Alternative credit scoring and lending – Millions of Africans are considered uncreditworthy because they lack credit history or even a means to prove their identity. Startups are figuring out new and fairer ways to assess risk.
  • Insurtech – Africa is home to 16% of the world’s population but less than 2% of insured catastrophe losses. There is an enormous opportunity for forward-thinking insurance companies.
  • Building Savings and Wealth – Life expectancy in Africa rose by from 51 to 61 over the past two decades. Entrepreneurs are filling a gap with innovations around savings, pensions, and financial literacy.

From the reason stated above, it is obvious that the Insurance system is prone to disruption as confirmed by the MD/CEO, African Operations, Inlaks, Femi Adeoti, at the launch of the Hackathon searching for Insurtech Solutions.

Opining that the Insurance sector in Nigeria is ripe for disruption by InsureTech in much the same way banking has by FinTech in recent years, Femi encouraged the Insurance sector to view entering the InsurTech environment as an opportunity to create partnerships and build mobile strategies focused on providing value in this increasingly digitized financial ecosystem.

Solving Nigeria’s Problems

The only way innovation can be embraced in Nigeria as a profitable way of life is if its products are used to solve problems peculiar to Nigerians.

Though an ancient sector, Insurance is yet to be appreciated by Nigerians, especially the uneducated or low-income earners who bother more about feeding and other basic needs instead of seeing a need to insure the life they are trying to sustain.

In a vicious cycle, catastrophe losses leave them destitute and helpless. While it might be obvious to the educated and medium to high-income earners how such losses wouldn’t have hit so bad, these victims are not aware or simply don’t trust the insurance processes.

Finding and discovering a way to serve the under and unserved, practising financial and digital inclusion, is a Nigerian problem every Technopreneur should seek solutions for in whatever sector they may choose.

Until the average Nigerian understands, appreciates and subscribes to insurance, FinTechs in Nigeria should bear in mind that they are not done and have lots of work to do.



Having so much data available, coupled with the average Nigerian’s trust in tech, Technopreneurs can help increase Nigerians trust in the insurance sector. They can also help with health insurance for the low-income earners, improving their access to good medical services as money is a key determinant of how low-income earners live.

Most importantly, if Nigerian Technopreneurs can focus on InsurTech, they might find a way to move Insurance from a detect and repair mode to a predict and prevent mode.

That will be a welcome disruption!

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@TechEconomyNG connects past-present-emerging technological impacts on Businesses, People and Cities. All Correspondence to: [email protected]

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