The urban life has its unique requirements, especially when loans are involved. The insurance industry which began as a group of people covering up for uncertainties, proliferated into a USD 4600 Bn industry worldwide in 2016, in terms of underwritten premiums. The insurance industry soon became a phenomenon, and the products started to become segmented. The life insurance sector was the market’s most lucrative in 2016, with total gross written premiums of USD 2500 Bn, holding more than half of the market’s overall value. It began to hold an important place in individual financial planning.
As per a PWC report, South African premiums (in 2014) accounted for USD 54 Bn out of the total USD 72.4 billion for Africa, representing a 1.17% world market share. Penetration levels reached 15.4%, which ranked 2nd in the world at the time, quite high even compared to advanced markets, possibly reflecting a relatively saturated market compared to the rest of Africa.
Having worked in the insurance industry for many years and with no immediate value creation for themselves, this young team set out on the road to find their purpose. It was the end of last year when Tlalane and Sokhulu decided to quit their jobs and give definite shape to their idea. Thus began Yalu, an insurance tech startup to take on a niche yet a prominent product of the insurance industry – Credit Insurance. It was an idea that often crossed this duo’s minds but was not making any headway with execution.
Headquartered at Johannesburg, Yalu attempts to solve the knowledge gap – whether a customer requires credit insurance or not. In most of the cases, as sighted by Yalu, a customer is not even aware whether the product he/she has bought includes credit. In their opinion, there is a considerable scope of savings, if a customer is unaware of the credit component in their insurance product.
Solving this knowledge gap was not a day’s job as per this startup. What they institutionalised was an insurance company that not only evaluates a customer’s need correctly but also recommends product very carefully to suit their credit insurance need.
“We’ve also made sure that consumers pay what is fair and that if they never claim from their policy, they get 10% of their premiums back,” the team cites.
What was brewing in the background…
Tlalane and Sokulu were both corporate animals, making progress in the financial sector. They experienced several moments of reflection when the realization to do something more meaningful dawned upon them.
Nkazi Sokulu was the Co-founder & COO of FNB Life, prior to Yalu. He was one-half of the duo who started the life insurance company within the FirstRand Group (the largest banking group by asset size in Africa) and received R200 Mn in capital backing from the group to start the insurer. But this did not please Nkazi much.
Sokulu often evaluated his journey and thought to himself, “I wanted to live up to who I am, and solve a real business problem.”
Tlalane had her inkling for starting up; she says, “It is very easy to get lost in the corporate system, and with the red tapes, it was all the more difficult to bring about any difference.”
Before Yalu, Tlalane Ntuli was the Head of Growth (Sales & Marketing) on the FNB Life Executive Committee. Her responsibilities included sales, retentions and marketing of all FNB Life’s products.
The idea of Yalu came during a lunch break, where both partners wanted to think and create a product/service which would give more mileage to the insurance industry customers. They knew that a lot of customers were not even aware whether the gap existed.
In South Africa, credit insurance products can be both voluntary and compulsory. Few credit providers insist on having a mandatory credit life insurance. As per Yalu’s research, close to 90% customers did not know that they pay for credit life insurance product where it is voluntary.
A great partnership is the first step to start a great business
Tlalane and Sokulu are firm believers of healthy partnerships for running businesses. Both individuals unanimously agree that the entrepreneurial journey becomes easier when you work with people you can trust.
Sokulu, comments here and adds, “ I have worked with people who have impressed me with their knowledge, at times intimidated me with their insane intelligence. But I knew, I had to work with someone I could trust.”
Nkazi remembers the days when his startup was running out of cash, and immediate funding was not on the horizon. “This was probably the most stressful period of this journey for us, we were anxious about how we would get through the next month of existence, and how we would honour our obligations but most importantly continue to move forward,” the duo said. “These are the days when you know that people you work with are the most crucial component of your startup. It is very fortunate to work with partners who have your back.”
Tlalane adds here, “It is also very important to get various skills to the table.” For the most of her career, she has worked in branding and sales vertical of the insurance industry. Whereas, Nkazi has handled many profiles of the same industry, with a primary focus on operations.
Tlalane adds here, “He is the head, I am the heart of Yalu.”
Determining the next steps…
The partners are clear that in the long run, they need to do more than solving just the credit life insurance problems, but their immediate goal is to set up a platform that gets their customers the right product.
Quitting their jobs last December afforded them enough time to draft the idea of Yalu. Bootstrapped since it started seven months ago, the startup found an investor who had interests in the same problem that they have set out to solve. The team got an infusion of seed funds from PIC in May, after an intense a process of acquiring this capital.
Many hold misconceptions about Yalu as being an agent, but it is an insurance company. It has partnered with Old Mutual and honors the license requirement for rolling out the insurance products through this partnership. In addition to the above regulatory need, it has also procured the Financial Service Provider license.
So, the story for this young team has just started, with ten members taking care of the entire business. Currently, they rely on digital marketing to promote their products as it is a challenge for them to break the clutter of heavily-advertised campaigns of the bigger players. What they feel is the most important step for them, is to educate their customers about the presence of a need in the first place. The team is focused on stabilizing their UX and platform for customer on-boarding. Covering personal loans at the moment, they soon want to branch out to other credit products like student loans and credit cards.