Starting a business always a massive challenge and while many fledgling enterprises battle to secure start-up funds, a lot of them run the very real risk of losing that capital if something goes wrong.

Most would settle for securing insurance from established institutions, but South African-based startup Riovic wants to do things a bit differently.

The self-styled “Uber of insurance”, Riovic wants to connect businesses with private investors who will back a company’s risk. I’s very similar to peer lending in the sense that it connects those in need of insurance with investors willing to pay for it.

“In this model, the private investor (or group of private investors) essentially steps into the financial shoes of the insurer, accepting a stream of certain cash flows in exchange for an uncertain future liability,” CEO and co-founder Phiwa Nkambule told htxt.

The idea

The idea of insuring a business without having to go through the usual mainstream hoops was conceived last year, as Nkambule realised there was a gap between insurance and investment information.

“We realised that the mass market (low to middle-class) was still largely under-served yet they needed most of these services the most and were largely exposed to scams and making bad investment decisions out of their need get out of poverty and reduce its effects in the future,” he said.

Due to the nature of the company, the model needs two components to operate: a small business and insurance company in the emerging market space for reinsurance.

At the moment, Riovic is operating with five businesses in the agricultural sector and are still in discussions with colleagues in the P2P insurance space globally to provide them with reinsurance.

But at the heart of it all is financial inclusion, and “the private-investor-backed insurance platform is provided to enhance financial inclusion in insurance by being a pillar to microinsurance companies and P2P insurance companies.”

Unfortunately, no matter where a business is set up in the world, insurance is a necessary evil. According to Nkambule, a large number of South Africans remain under-served by the insurance industry. For example, only 20% of South Africans have health insurance, and if micro health insurance (through a model like Riovic’s) is backed, this number can be increased.

“Riovic is displacing the insurance company as the bridge between the investor and the person (or business) with risk and providing an environment for emerging markets to grow. In the past only insurance companies and financial institutions profited from insurance and we are changing that by opening it up to people,” he explained.

Facebook

To elevate the company’s profile just a little bit, Riovic is also signed up to Facebook’s FbStart accelerator programme. Through FbStart, it provides startups with an exclusive community, worldwide events, mentorship from Facebook, and up to $80 000 in free tools and services.

“What qualified us was our mission to provide financial inclusion and the platform we had worked on to meet that goal. Since Facebook isn’t yet fully present in South Africa, we currently on benefit virtually and but would benefit from live activities if we’d move to San Francisco.”

Being part of the programme, in Riovic’s case, it gives it access to tools and services to the value of $30 000 from Facebook and their partners – and it includes things like Facebook Ads. It also allows them to qualify for events like F8 and Hackathons around the world and are assigned mentors who help it build its company.

The business model is something that Riovic sees as eliminating dependency on the traditional insurance and finance market for nascent insurance markets for survival and success.

“The ‘ease’ that we bring is to the industry, not the delivery of insurance products. We believe that with such flexibility consumers will be served well by insurers who are more socially driven than profit driven.”

If you have a business and need insurance on whatever you are doing, think about Riovic next time. The company truly wants to put other startups with like-minded people who are willing to provide insurance for a company, while also taking on some of the risk. Going through the traditional means of getting business insurance can be tedious, and more time than not companies won’t be fully insured for what it is worth.

Riovic wants to change that, and it has big plans for the insurance market in South Africa.

[Image – CC by 2.0/Steve Rhodes]
Charlie started his professional life as a motoring journalist for a community newspaper in Mpumalanga, Charlie explored different journalistic angles since his entry into the fast-paced world of publishing in 2006. While fostering a passion for the arts, Charlie developed a love for technology – both which allowed him to serve as Entertainment and Technology Editor for an online publication. Charlie has since been heavily involved in consumer technology for various websites and publications. He thoroughly enjoys World War II films and cerebral documentaries; aviation; photography and indie music. Oh yes, and he also has a rather strange obsession with collecting coffee mugs from his travels.