Evolving InsurTech: MAGNiTT interviews Sehteq's Co-Founder, Saif AlJaibeji

Sehteq, a Dubai-based Health Insurance startup recently secured a $20M commitment to set up a reinsurance vertical, led by their anchor investor 971 Capital. On the back of Sehteq's news, we caught up with the evolving startup's Co-Founder and Chairman, Saif AlJaibeji to discuss how the company operates, how consumer demand has been altered over the last few months, how they were able to raise such a significant amount of capital, their plans for growth, and more. 

To start, tell us briefly about the Sehteq platform and how it operates?

Sehteq, Arabic for your health, is a digital health insurance startup born out of Ras Al Khaimah Incubator and Accelerator in November 2017. It was launched by the Department of Economic Development, Government of Ras Al Khaimah as a digital health insurance platform or “InsurTech”. Our journey started 90 days later with a decision to be a health insurance provider to individuals, SMEs, and companies, “known as third party administer TPA”.

TPA licenses are issued by 4 regulatory authorities; Department of Economic Development, Insurance Authority, Dubai Health Authority, and Department of Health in Abu Dhabi. The Insurance Authority issued 21 licenses and the last one was awarded in 2016.

Sehteq acquired 12 year old licensed TPA business in February 2018, we then acquired two more fully licensed health insurance providers and two supplementary healthcare management businesses in the summer of 2019. Sehteq integrated all businesses under one roof in an industrial warehouse to reflect our startup DNA within 100 days. 

This week, we started a multidimensional growth journey with 4 verticals and 4 different trade licenses and separate P&L - a service hub to manage health, wellness and wellbeing of our soon to be one million consumers, a solid technology platform to support our growth and help the ecosystem with investment into building and acquiring consumer-centric applications to bring Sehteq another step closer to an Oscar-like model.

Our technology is not exclusive to Sehteq and used by more than 100 partners. Sehteq will bring stability and establish trust in the brand locally and globally. 

Raising a funding round under the current circumstances is laudable in itself. To secure such a large investment is extraordinary. We have to ask if this was something in the making at an earlier stage or a more recent development?

971 Capital's mandate is insurance and health, and this is exactly what do. 971 Capital funded our initial investments and they have seen very healthy numbers - our business grew by 3000%, we are 100+ people, and double digits in profitability. I believe it is easier to raise funds when the business is cash positive. We were planning to raise $10M pre-COVID-19 to fund our expansion in products and markets, but we had to pivot to secure investment with a reinsurance setup (where most of the investors’ money is kept in a bank guarantee and a smaller portion is used to build and acquire technology, and expand to a new market simultaneously). 

Against the backdrop of the global pandemic, health insurance must be something of a precious commodity right now. Have you experienced greater than normal demand for your services, and if so, how have you coped with this?

We’ve seen a surge in demand from individuals and enterprises to buy health insurance. Sehteq Portals, our technology arm, has an AI-powered B2B2C platform which is used by brokers and agents. There has been a 20% increase in demand on individual and family health insurance coverage, and a higher renewal rate for employers led health benefits plan. Our products are super flexible, consumers can build their own products, and we’ve seen a higher demand for enhanced benefits rather than basic coverage. 

The number of customer calls and requests has equally increased. We offer our users to connect directly with a physician to consult over the phone and arrange to deliver the medication to their doorsteps. On the back end, we leverage technology to automate more than 90% of our processes. Sehteq is very much an IT company rather than a legacy insurance business. The investment in technology paid off as we do not need to hire resources to do repetitive work. 

What changes have you seen in the health insurance industry over the past few months, if any? And do you think these changes will become a norm?

The United Arab Emirates is to merge financial sector regulators, whilst Insurance Authority (IA) and Securities and Commodities Authority (SCA) will merge as part of a significant restructuring of government and supervisory authorities. These latest regulatory guidelines add pressure on the weak players and bring maturity to the market. The industry was hit hard by the exits of 3 providers and we will see more consolidations and mergers. Sehteq has 3 more M&A transactions before the end of the year.  

You mentioned insurance as being a highly regulated industry and a bit of a minefield to navigate in terms of complex systems. Do you think this will improve in the near future?

Insurance is a legacy business and is built on fine prints. It has to change. I was a policymaker and worked with the regulatory authorities in UAE, this is another unfair advantage that helps with navigating the system. There is a new regulatory framework for online insurance aggregators to operate in the country. It adds pressure on small players, yet, it helps investors and entrepreneurs to make the right decisions. The improvement in financial sector regulations to help FinTech will eventually set the stage for InsurTech favorable regulatory changes. I’m hopeful. 

It’s safe to assume that after this round, you're going to have some exciting growth plans. Can you tell us a little bit more about some of Sehteq’s short-term plans for expansion with us? 

There will be more money in technology and applications. We used to invest 40% of Sehteq P&L in innovation compared to a less than 3% market average. Our operating expenses are higher now, but tech is still a high ticket. The additional $3M will help accelerate our technology development with acquisitions. Oman is a natural expansion for our UAE hub, we are planning on setting up in Muscat. 

What were you looking for from your investors, beyond capital?

I strongly believe that entrepreneurs should focus on creating a working model, and then selectively choose his/her investors. The access and relationship of investors are more important than capital in many situations. Insurance is complex for a lot of investors. Back in 2017, the team gave up on pitching to investors because 90% of them linked investment with changing the business model to be another aggregator.

What is your big-picture vision for the future of Sehteq?

I want Sehteq to be the design studio and experiment lab for the insurance industry. I’ve worked for 15 years with major players in the global markets, and the advantage this startup has is simplicity. We don’t want to compete with the big boys, we want them to be powered by Sehteq’s innovative and white-labelled solutions – just like Intel. Our vision is clear, we have to have one million consumers first and then restlessly innovate to bring the best value for money. Our offering is modular, so a client can design his/her own product, and a partner can choose to buy or lease one component of our solutions menu. Seha (health) teq (technology) plans to lead with innovation. 

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The Real Estate industry saw sizable investment activity over the last 5 years, with a total of 16 investment deals from 2015 to 2019. Access more trends and data in our 2019 Real Estate Venture Investment Report.