Ethio-Life, Lumina Launch Digital Life Insurance Platform, Tapping Underinsured Ethiopian Market

An ambitious new product by Ethio-Life & General Insurance S.C. and Lumina Technologies PLC looks to introduce a first-of-its-kind digital life insurance service onto the market. The seventeen-year-old insurer unveiled a platform named after the technology provider, Lumina, at the Inter-Luxury Hotel on Thursday. It relies on the Fayda national Digital ID for registration and charges premiums starting from 415 Birr, while claims of up to 750,000 Birr may be settled.

Shimeles G. Giorgis, CEO of Ethio-life & General Insurance S.C., said the idea for the product came about from Lumina, which had conducted a feasibility study through Fasika Consult to assess the barriers for the adoption of life insurance in Ethiopia. Lack of awareness and inability to access nearby insurance branches were determined to be the leading challenges.

Shimeles recalled that while the insurer has been operating for nearly two decades, it has had limited success in attaining deep penetration for life insurance services. The insurer, which managed to collect around 734 million Birr in gross written premiums in the last financial year, relied on general business for 71% of its premium income.

“A digital solution was the way to go,” the CEO said.

The digital insurance platform, which operates in four local languages in addition to English, relies on its integration with the national ID to verify identity. A chatbot then asks a series of questions to determine risk by factoring in health status, age, and other relevant details. SantimPay and Chapa, both integrated with nearly all banks and mobile money platforms in Ethiopia, serve as the two payment operators handling premium payments

Giuliano Veneziani, CEO and Co-founder of Lumia, said claims will be settled at the latest within two days, given that adequate documentation on the deceased is provided. He also noted that they have prepared a format that allows the settlement of claims from any financial institution required by the policyholder.

“There are no limits on the number of beneficiaries,” Giuliano told Shega.

He further revealed that it took them a year and two months to develop a seamless and intuitive platform. Both CEOs acknowledged the limited penetration of insurance in Ethiopia and underscored that less than 400,000 people held life insurance policies. Most of the insured were also identified to be either forced by the nature of their employment or were provided life insurance by their employer.

Ethiopia’s insurance industry features 18 players, of which only 13 provide life insurance services that managed to collect just a little over 1.4 billion Birr in life insurance premiums two years ago. A figure that accounted for around 6% of the gross total premiums collected in the same year. The low level of penetration partly contributes to the high degree of reliance by most Ethiopians on traditional saving institutions like Edir when dealing with the loss of a loved one. Nonetheless, the overall development of the insurance industry has also remained limited, contributing less than 1% to the country’s GDP.