Karachi-based online insurance startup Waada has acquired a rival company to become Pakistan’s largest insurance-tech startup, according the company’s official press release.
The company has acquired MicroEnsure Pakistan, a subsidiary of MIC Global that operates in South Asia and Africa, in an all-stock buyout. Waada did not disclose the deal’s value and also announced the completion of a $1.3 million seed round from local angel investors and foreign venture capital firms.
CEO & Founder, Ishaq Kothawala said, “Pakistan Insurance penetration is 0.7%, lowest in the region. Technology can play a huge role to tap that gap, specifically through creating the gig economy for agents & underwriters. This acquisition gives us the strength to lead that innovation from the front”.
Waada’s in-house platform enables anyone in the country to virtually sign-up, watch training videos, qualify as a gig agent and get policies issued within minutes without ever visiting Waada’s premises. This automation creates value by reducing admin costs in the distribution chain enabling Waada to offer a higher commission to agents and lower prices to the customer.
“Insurance is about selling a future promise, hence, establishing that trust to fulfill that Waada is crucial in distribution. Our primal nature depends on human connection to establish that trust. Therefore, I believe agents are always going to play a key role in Insurance distribution. The need is to automate every process, from underwriting to policy issuance, from leads management to commissions & claims, in order to empower agents to focus on selling and not the admin,” he added.
MicroEnsure and Waada both have a combined active customer base of 1.5 million and the latter is seeking to take advantage of it by opting for aggressive growth in today’s highly competitive market.
Waada investor Nadeem Hussain, who assisted in the deal with MicroEnsure, said, “This is the first of many consolidations which the Pakistan market will experience. The global slowdown will make fundraising difficult”.
Pakistan has one of the world’s largest unbanked populations, providing ample opportunity for growth in the country’s financial sector. The country’s insurance penetration rate is only 0.7 percent, trailing that of its Asian neighbors. In this regard, Waada’s goal is to add customers through online sign-ups and to distribute 10 million policies within three to five years.
CEO of MIC Global, Harry Croydon, said, “We are really excited about the acquisition of our Pakistan operations by Waada. Together, with our global insurance experience and Waada’s strong on-ground presence, we can achieve great scale in Pakistan and beyond”.
With this consolidation, Waada’s goal is to become the leading brand of insurance in the country, distributing 10 million policies in the next 3 to 5 years.
2021 was a good year for Pakistan’s startup industry which received record funding at the time, but has since experienced a slump as venture investors became more cautious in the face of an economic slowdown and falling technology stocks.
This year, many companies bid farewell to the local startup landscape. Airlift Technologies, which raised Pakistan’s largest round, ceased operations in July. Vitol’s used-car venture VavaCars exited the market this year, and Dubai-based commute provider Swvl Holdings closed daily operations in the country after incurring losses.
