Insurtech startup Lumkani has closed a seed funding round to provide highly vulnerable, traditionally excluded, low-income consumers living in informal settlements with insurance coverage.
The funding round was led by 4Di Capital and Accion Venture Lab, the seed-stage investment initiative of financial inclusion leader Accion with participation of Lireas. Lumkani will use the funds to enhance and grow its product offerings, reach new communities throughout South Africa, and expand its team.
“At Lumkani, we are committed to providing South Africans living in informal settlements with access to financial services that have previously not been on the market. We look forward to working with our new partners 4Di Capital, Accion Venture Lab, and Lireas to strengthen our ability to reach even more underserved consumers,” said David Gluckman, Director of Lumkani.
Founded in 2015, Lumkani addresses the challenge of fire safety in informal settlements through a combination of early-warning fire detection technology and financial services. Lumkani leverages proprietary hardware and a tech-enabled agent network to provide consumers living in informal settlements with insurance that protects against loss of life, shelter, and assets in the case of a home fire.
Lumkani bundles this insurance product with an Internet of Things (IoT) connected heat sensor that detects fire in and around homes. Lumkani’s insurtech software generates data on household value, location, and demographics that Lumkani can use to underwrite, service, and pay out claims.
Consumers living in informal communities experience high-density accommodation, lack of access to basic amenities, and are overexposed to fires and other disasters. Consumers in this market also face significant challenges in accessing basic financial services.
“At 4Di Capital, we are excited about the potential for new technology and new data sources to create inclusion for the millions of South Africans presently not able to access financial services, as they do not have a formal address, a credit history or a KYC record, and traditional financial and risk products are unsuitably designed. Lumkani’s approach enables this effectively and affordably, potentially creating a whole new class of financial services customers,” said Justin Stanford, partner at 4Di Capital.
“More than a billion people live in overcrowded informal settlements with the fear of fires and other catastrophic events. Lumkani’s innovative insurtech offering is helping this vulnerable population feel safe in their homes,” said Michael Schlein, President and CEO of Accion. “Lumkani is a great example of how the right combination of technology and direct client support – ‘tech’ and ‘touch’ – can make insurance more accessible and scalable,” added Amee Parbhoo, Director of Investments at Accion Venture Lab.
According to Valerie Hayter, Managing Director of Lireas, Lumkani has the potential to make a difference to the most vulnerable of society and at the same time save lives.
In 2015, The Tech Awards awarded Lumkani’s IoT heat sensor the Katherine M. Swanson Young Innovator Award. To-date, Lumkani has distributed more than 17,000 IoT heat sensors, and in 2016 launched a complementary insurance product. It has expanded its offerings to over 30 communities throughout South Africa.