Democrance: Democratising insurance digitally

Roughly 98% of people in the Middle East and North Africa lack access to insurance and other risk protection mechanisms. On the supply side, this is because insurance distribution and administration relies on outdated processes and practices such as agents and brokers, spreadsheets and paper documentation, making expansion into poorer and harder-to-reach segments of society both unfeasible and unprofitable for insurers. On the demand side, potential customers in these segments struggle with brand recognition, the amount of paperwork required at the time of policy enrolment and claim, extensive exclusion conditions, high premium prices and traditional ways of paying premiums (eg via bank transfer).

Democrance is an insurance technology company that helps automate large sections of the insurance value chain, including marketing, distribution through non-traditional channels (eg telecommunication, mobile money), underwriting, policy administration and claims management. Its technology enables clients in the insurance industry to incrementally raise sales conversion, retention and cross-selling and cost savings while serving untapped market segments, especially at the base of the economic pyramid. In short, Democrance makes doing business with low-income customers more profitable for insurance companies and brokers by reducing the cost-to-sell and cost-to-serve of policies. It also makes insurance products – particularly life and health – more accessible to such customers.

As its micro-insurance business is not yet self-sustaining, Democrance also offers digitisation services to the mainstream market in the Middle East, Asia and soon Sub-Saharan Africa. As of mid-2022, about 80% of its revenue came from contracts with traditional insurance, covering 4% of insured lives – mostly at the top of the economic pyramid – which subsidised the other 20% of contracts covering everyone else. It will use its share of the Entrepreneurs for Resilience Award grant to stay focused on its original purpose, growing its micro-insurance arm until it becomes financially sustainable.

Until now, the venture has digitised 1.1 million active policies (2.5 million including inactive policies), with monthly premiums ranging from USD 0.05 to USD 250 000, for 15 insurance companies and one broker, in 16 markets. Currently, it works in Thailand (micro-insurance), Malaysia (micro-insurance), Cambodia (micro- and mainstream insurance), Philippines (micro-insurance), Saudi Arabia (mainstream insurance), the UAE (micro- and mainstream insurance), Kuwait (mainstream insurance), Qatar (mainstream), Egypt (micro-insurance), Kenya (micro-insurance), Senegal (micro-insurance) and Belgium (micro-insurance).

The award grant will be used to detach Democrance’s micro-insurance business from its traditional digital insurance business in a stand-alone unit within the company. This new unit would be responsible exclusively for micro-insurance, mostly in emerging markets of Asia and Africa, and include dedicated business developers, programme and product managers to ensure it can pursue new opportunities with the same focus and innovativeness as the traditional digital insurance business. That team would also include an impact analyst who co-creates the micro-insurance business model with partners, measures and tracks impact and helps make more informed business decisions in general.

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