Resolution Insurance is investing $3m into technology to disrupt insurance in East Africa



Resolution Insurance is set to invest $3 million on technology to bring insurance services to the region’s 150 million plus people.

Speaking to TechMoran, Resolution Insurance’s founder and CEO Peter Nduati said, ”We will use the money to launch new products, buy and install systems, transform the insurance talent and consolidate in Kenya, Uganda and Tanzania. The system alone will cost us around 800 million. Then we will consolidate in Uganda and Tanzania. $2m each will go to Uganda and Tanzania. We sold off our South Sudan and Sudan due to war and most of our clients were in the oil field and had moved out.”

The firm will also use the money to hire general managers, compliance managers and risk managers to consolidate its hold on the insurance in East Africa

Resolution Insurance’s platform already enables online sales, research, brokerage services online but the new system will help the firm do more.

“We are installing a general insurance platform with CRM software and an app, sales online and broker online system. We have already identified the vendor and we are tweaking the system to our use,” said Nduati. “In future the system will power member online management and online sales so that clients will be able to submit and do everything online such as get doctor information, log in and as well allow an SMS category that will see a user add or subtract a dependent, add or remove an employee, check their bills and confirm and visit a doctor and see their balance and data of up to 10 transactions.”

The platform will enable one to search for a doctor, book an appointment and then visit them and see how much they spent on the visit and their balance in the system. The system will cost around Ksh 800m and is part of the $3 million dollars the firm has put aside for its technology.

Apart from investing in technology, the firm is also planning to launch new insurance products which other firms haven’t yet tackled.

With over $18m in hand, the firm is also working on alternative distribution strategies such as direct sales force or bank assurance, white labeling and even use of mobile platforms to distribute its products differently in a move expected to disrupt insurance in the region totally.

Launched in Kenya in 2002 as a Medical Insurance Provider, Resolution Health East Africa had Medical Insurance as its core product for over decade managing the medical needs of over 60,000 clients from both the corporate, social groups and individuals connected to a network of over 750 Medical Service Providers across the region.

But as it was celebrating its ten year anniversary, Nduati knew the days or running just health insurance were numbered even it had been named as Medical Insurance Provider of the Year in 2012 in the Think Business Insurance Awards and being the first company to be registered as a medical insurance provider under the revised Insurance Act.

A year later, Resolution Health was licensed by the Insurance Regulatory Authority to run as a general insurer covering risks such as fire, accidents, terrorism, theft, personal accident, workmen’s compensation, and various other general policies. This meant Resolution Insurance needed money to fulfil its journey.

“It was always our decision. We had sixty thousand people who had already believed in us so we decided to take more. In medical insurance the cash flow is very quick, so within thirty days you are paying the money already and you can’t do long-term investments,” said Nduati.

Medical Insurance hindered them from investing in any other businesses but the tought of general insurance promised them great opportunities as the risks are low and take long to mature.

Resolution Health also had operations across East Africa and owned shares in these countries and had become too big for the Kenyan regulator, but to expand into general insurance, the firm needed more capital and its ownership structure had to change according to the law.

625653_433899310025110_1237136342_nBefore 2010, Nduati literally owned the business alone. He had raised a small amount from his family and set up a holding company to hold his shares. He had taken in John Mwangi, the retired Equity Bank CEO, as his earliest investor with a 20% stake in the company. Later he brought in ADC.

The insurance act was later amended and required one to set up reserves every day than the old formula which required firms to reserve after 30 days. The firm decided to keep its old health insurance business and set up a new business as Resolution Insurance. Resolution Health was left as the holding company for Kenya, Uganda, Tanzania, and South Sudan.

Nduati says the new business would then significantly help them as they were transforming their portfolios from just medical insurance packages to general insurance coverage. Medical insurance only looked at one package and left out the rest.

“Unlike health insurance, general insurance risks are low and might take premium holder years before they claim any compensation, general insurance made more business sense than the former,” Nduati says. “A general insurer can for example, put the premiums into other investments like real estate and manufacturing unlike health insurance. The license required us to do monoline insurance operator we decided to do that.”

The $2m the firm is investing in technology is just a fraction of the US$18.7m Resolution Insurance raised from LeapFrog Investments in exchange for a majority stake in Resolution Insurance to take on East Africa’s Insurance market estimated to be worth $2 billion. On its own, Resolution Insurance couldn’t have managed to take on the capital intensive insurance industry. The law also forbidden owner managers like Nduati to own over 25% of their insurance companies.

To proof Resolution Insurance wasn’t a one-hit wonder, Nduati, who did his Economics degree in Punjab, then went to Scotland for his M.Sc. in Insurance and then later earned his Chartered Insurance certification is also passionate about Music, Rugby and Real Estate.

Calling himself a corridor investor, the Chartered Insurer runs Pine Creek Records, a music production house with popular names such as Anto Neo-Soul, Jaya, Webi and Nikii, Mr.Lenny, Atemi and Didge. The production helps market artists by showcasing them in local and regional concerts. The stable also sells music though digital platforms and ringtones.

He also runs Absolute Security, Consumer Benchmark Ltd and a PE firm Redwood Capital and Brown Oak Holdings, a real estate firm. His love for Rugby has also seen him play for Impala after university, and then later served as chair of the Kenya Rugby Union for two terms, something he is still considering to vie again. He also served as a former Chairman of Kenya’s Impala RFC among other things.