MAGNiTT Intelligence: Top funded InsurTech startups are concentrated in the UAE, with an upward funding trend

Key highlights:

- The majority of InsurTech startups in MENA are active in the comparison of insurance policies, including health, travel, home and vehicle insurance.

- Many of the top funded InsurTech startups complement these services by offering the comparison of other financial products such as credit cards, bank accounts and loans as well, while others focus more on HR & Benefits offerings.

- The disclosed funding in the InsurTech startup market is very concentrated, with the top 4 funded MENA-based startups raising 99% of all funding in the InsurTech market according to MAGNiTT data.

- The majority of funding is concentrated in the UAE, with all of the top 5 funded InsurTech startups coming out of the UAE.

Do you want to learn more about the entire FinTech industry in MENA, including key drivers and funding trends? Download the full free FinTech report here.

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As highlighted by MAGNiTT’s 2019 MENA FinTech Venture Report, in collaboration with Abu Dhabi Global Market (ADGM), the FinTech industry has seen a significant increase in the number of deals over the years. However, when looking at the development stage of these startups, it can be seen that the majority of deals are still at the early stage, with accelerators accounting for a sizeable proportion of them.

 

 

One sub-vertical of FinTech, however, has seen a significant amount of funding as startups graduate to later stages: insurance technology, or InsurTech for short. Recently, Bayzat announced its $16M Series B fundraise led by Mubadala Capital and Point72 Ventures, highlighting investors’ appetite for regional InsurTech startups.

In 2019 YTD, $26M has been invested in MENA-based InsurTech startups according to MAGNiTT data, which is the highest amount in any year in recorded history, with a clear upward trend in both funding and number of deals since 2015.

 

According to Atlas Research, the insurance premiums market in the Middle East and North Africa was $57B in 2018, which provides a large addressable market for InsurTech startups. Moreover, among the low-income migrant workers in the United Arab Emirates (UAE), 79% were not insured according to Zawya, increasing the potential for micro-insurance as well.

This article delves deeper into the top 5 funded InsurTech startups – by total disclosed funding –  in the Middle East and North Africa in order to understand the landscape better, as well as find commonalities and differences between them.

 

1. Bayzat - $28.5M

Through its recent $16M Series B funding round, Abu Dhabi-based Bayzat has become the top funded InsurTech startup by disclosed funding in the MENA region, having raised a total of $28.5M. Founded in 2012 by Brian Habibi, Talal Bayaa, and Tarek Bayaa, Bayzat’s investors include BECO Capital, Mubadala Capital, Point72 Ventures, WOMENA, Ra’ed Ventures, Silicon Badia, Vision Ventures, Greyhound Capital, ELM, Techinvestcom and Endeavor Catalyst.

As a company, Bayzat’s goal is to make its employee experience available to all small and medium-sized enterprises (SMEs) by helping them compare, buy and use their health insurance. Moreover, the company has expanded into several other lines of business as well, including Human Resources (HR) services such as payroll processing, time-off management and employee record management.

 

2. Aqeed - $18.0M

Launched in 2018 by its corporate shareholders Barents, an international Reinsurance group, and Equitrust, the corporate venture capital arm of Choueiri Group, Aqeed raised a $18M Series A funding round to launch the company and offer its insurance services.

Aside from health insurance, Aqeed focuses on the comparison of travel, life, motor, home, and other types of insurance as well. Similar to Bayzat, Aqeed has launched an HR & Benefits platform, through which it offers HR services to corporates.

 

3. Souqalmal - $17.2M

Founded in 2012 by Ambareen Musa, Dubai-based Souqalmal has raised $17.2M from investors such as 500 Startups, Riyad Taqnia Fund (RTF), Hummingbird Ventures, UAE Exchange, VentureSouq, Endeavor Catalyst, Shorooq Partners, WOMENA and Gocompare.

Similar to Aqeed, Souqalmal offers price comparison in a wide array of insurance industries, including health, travel, life, motor and others. However, unlike Aqeed and Bayzat, Souqalmal extends its product line by offering comparison of other financial instruments, including loans, credit cards and bank accounts. Interestingly, upon its launch in May 2012, Souqalmal did not offer insurance comparison, as this was added a few months later in October 2012.

 

4. Yallacompare - $15.4M

Launched in 2011 in Dubai, Yallacompare – previously compareit4me – has received $15.4M in disclosed venture funding from investors including Wamda Capital, STC Ventures, Argo Ventures, DTEC Ventures and Saned Partners.

Comparable to Souqalmal, Yallacompare focuses on the comparison in pricing of financial products and insurance alike, including vehicle, home, life, health and travel insurance, as well as the comparison of financial products such as credit cards, loans and bank accounts. Currently, Yallacompare is active in 9 markets in the Middle East and North Africa, including all GCC countries, Egypt, Jordan and Lebanon.

 

5. Democrance - $0.8M

Democrance, a Dubai-based startup founded in 2015 by Alberto Pérez and Michele Grosso, is active in a different branch of the InsurTech market. Unlike the financial comparison, Democrance aims to make insurance accessible and affordable to underserved consumers via mobile and digital channels by partnering with large insurance providers such as AIG, giving insurance companies a way to reach large, previously untapped populations and providing those people with insurance protection.

With this approach, Democrance has raised $0.8M in total disclosed seed funding from investors including Hala Ventures, Jabbar Internet Group, TURN8, Seedstars and Eos Venture Partners.

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Looking at these top 5 invested MENA-based InsurTech startups by disclosed funding, four trends stand out.

1. Firstly, the majority of InsurTech startups in MENA are active in the comparison of insurance policies, including health, travel, home and vehicle insurance, among others. This means that other InsurTech initiatives, such as providing (re-)insurance or providing services to insurance firms, are less popular.

2. Secondly, many of the top funded InsurTech startups complement these services by offering the comparison of other financial products such as credit cards, bank accounts and loans as well, while others focus more on HR & Benefits offerings. In other words, just providing insurance comparison, without focusing on any other added benefit, does not seem to be a sustainable strategy in the InsurTech startup ecosystem.

3. Third, the disclosed funding in the InsurTech startup market is very concentrated, with the top 4 funded MENA-based startups raising 99% of all funding in the InsurTech market according to MAGNiTT data – the industry is very top-heavy, with several local and international InsurTech startups competing for the same eyeballs and venture funding.

4. Lastly, the majority of funding is concentrated in the UAE, with all of the top 5 funded InsurTech startups coming out of the UAE. With 3 of them being founded in 2011 and 2012, during the first wave of startups and entrepreneurship in the region, it is only a matter of time until InsurTech from other MENA countries raise funding and scale across the region.

Similar to the ride-hailing and e-commerce industry, the insurance comparison market may be a winner-take-all industry, with one or two startups being able to capture (almost) the entire market. If other emerging markets such as India and South-East Asia are any indication, this will likely be the case, providing large potential for investors and entrepreneurs alike.

 

Do you want to learn more about the entire FinTech industry in MENA, including key drivers and funding trends? Download the full free FinTech report here.