South African Insurance Startup Root Secures $3M Funding

South African insurance startup Root has secured $3 million in a seed funding round to go international and help build the infrastructure for a global digital insurance market.

Despite the presence of huge insurance firms across the world, Roots looks to make its mark and tap more opportunities in the space which is valued at over $5 trillion. The platform allows the use of an application programming interface to let businesses and developers deploy insurance products at a much faster pace.

The $3 million funding round included venture capital firms Invenfin, Base Capital, Savannah Fund, P1 Ventures, Luno, and FireID, as well as several high-impact angel investors. Root launched with the supposition that many restraints, including compliance and funding, hindered software developers and organisations from building and innovating around insurance.

CEO Louw Hopley who is also the founder of the South African insurance startup Root, said he noticed in 2015 that while other financial institutions began to leverage APIs to effortlessly allow developers to build solutions suited to their offerings, nothing was being built around insurance.

“We’ve got quite a strong feeling that insurance is stuck in the 1900s. There’s still a lot of paper being used even as consumer behaviour has moved to digital real-time. There’s a personalised kind of environment pretty much in every industry, but insurance is struggling to catch up”, he said.

“And that’s kind of what we’re trying to figure out to break down those barriers and package it behind easy to use APIs so that people can start solving for this new modern digital personalised age”.

A Look Back at Root

Launched in 2015, Root’s first product was programmable bank accounts and cards. But it currently focuses on insurance APIs which sits top of insurance firms’ services, supporting the products that developers and business analysts construct. It also integrates into their existing customer experiences, which can take the form of a website, a chatbot, or a mobile app.

The five-year-old startup focuses on non-insurance firms that offer insurance as a supplementary product. For example, telecommunications companies, merchants, and banks. However, it also powers affinity insurance players, which are tagged as some of the largest in South Africa.

Mr Price Money, FinChoice, Telkom, Metropolitan, Sanlam, and Guardrisk are among these clients. These companies handle millions of policies and thousands of claims each month using Root’s insurance infrastructure. 

However, the company’s primary goal, especially as it grows into new territory, is to help build the global insurance industry’s operating system.

“We feel there needs to be a standard platform on which people innovate and build their products and integrate with. Essentially, that means we want to be the platform all product innovators, actuaries and developers will log into to build insurance products and get them to market. We feel that if you do that you can drive much more innovation faster because you kind of enable sub-economies to spin up and other people to start building specific solutions into insurance. It essentially integrates the whole industry”, said Hopley.

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