SOUTH AFRICARoot, a South African insurtech API startup that helps businesses and developers launch insurance products more quickly than the traditional approach, has acquired US$3 million in seed funding to expand outside of South Africa and establish the infrastructure for the global digital insurance industry.

The round included venture capital firms Invenfin, Base Capital, Savannah Fund, P1 Ventures, Luno, and FireID, as well as several high-impact angel investors.

“We’ve got quite a strong feeling that insurance is stuck in the 1900s. There’s still a lot of paper being used even as consumer behaviour has moved to digital real-time,” CEO Louw Hopley said.

“There’s a personalized kind of environment pretty much in every industry, but insurance is struggling to catch up.

“And that’s kind of what we’re trying to figure out to break down those barriers and package it behind easy to use APIs so that people can start solving for this new modern digital personalized age.”

Root plans to use the new capital to expand its flexible low-code digital insurance platform to new countries, particularly Europe.

Hopley did not specify which nations Root would enter; but, based on the degree of insurance play in the region, the United Kingdom, Germany, and France could be among the first.

While Root intends to acquire more technical and business talent in Europe, Hopley claims that a significant portion of the company’s workforce will remain in South Africa.

However, the company’s primary goal, especially as it grows into new territory, is to create the global insurance industry’s operating system, according to Hopley.

Root’s APIs, according to Base Capital’s Paul Rutherford, provide simplicity to the complex business of insurance and improve the experience of both consumers and insurers.

P1 Ventures’ Mikael Hajjar, on the other hand, believes Root is the best-positioned African insurtech business to capture market share in Europe and the United States.

Hopley launched Root in 2016. In 2018, Jonathan Stewart joined as a co-founder and director of sales and partnerships. Root’s first product was programmable bank accounts and cards, but it currently focuses on insurance APIs.

“We feel there needs to be a standard platform on which people innovate and build their products and integrate with,” Hopley said.

“Essentially, that means we want to be the platform all product innovators, actuaries and developers will log into to build insurance products and get them to market.

“We feel that if you do that you can drive much more innovation faster because you kind of enable sub economies to spin up and other people to start building specific solutions into insurance. It essentially integrates the whole industry.”

Root sits on top of insurance firms, which underwrite the products that developers and business analysts construct and integrate into their existing customer experiences, which can take the form of a website, a chatbot, or a mobile app.

The five-year-old firm focuses on non-insurance firms with a consistent client base, as well as enterprises that offer insurance as a supplementary product.

For example, telecommunications companies, merchants, and banks. It does, however, power affinity insurance players, including some of the largest in South Africa.

Mr Price Money, FinChoice, Telkom, Metropolitan, Sanlam, and Guardrisk are among these clients. These companies have handled millions of policies and thousands of claims each month using Root’s insurance infrastructure.

The South African firm makes money by charging subscription license fees based on the size and complexity of its clients’ requirements.

Root not only assists developers and businesses with the development of insurance products, but it also provides ways for these companies to reach additional customers and manages compliance difficulties.

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