Denis Opudo
One of the sectors that have recorded a drastic growth since its establishment is the insurance sector. The sector started as a group of individuals covering up for uncertainties. In 2016 it grew into a $4,600 billion industry globally as far as underwritten premiums are concerned. The insurance sector, later on, became a real deal and products started to be segmented. In 2016 the most lucrative of the market was the life insurance sector having a total gross of written premiums worth $2,500 billion. This was half of the total value of the market. The sector started to become part and parcel of people’s financial planning.
In reference to the PWC report, in 2014, South African premiums accounted for $54 billion out of the valuation of $72.4 billion for the whole continent. The value represented 1.17% of the global market share. The level of penetration got to 15.4% that ranked 2nd globally by that time higher than advanced markets. It possibly reflected a slightly saturated market in comparison to the rest of Africa. At the end of 2017, Sokhulu and Tlalane decided to leave their jobs and fully concentrate on their ideas. This was after they had worked in the industry for long without adding any value to their lives. They decided to launch Yalu, an insurance tech startup to take on Credit Insurance. The two had the idea but executing it was the main challenge to them.
With its headquarters at Johannesburg, the startup tries to narrow the knowledge gap whether a client needs credit insurance or not. Often times clients don’t know whether the product they have bought comes with credit. According to Sokhulu and Tlalane, there is a given percentage of savings in case the client is unaware of the credit component in their insurance product. Narrowing the knowledge gap was not an overnight job according to Yalu. They institutionalized an insurance firm that recommends a product very carefully to go well with their credit insurance requirements. According to the two, they have ensured that consumers make regular payments and in case they do not claim on their policy they are given back 10% of their premiums.
Sokulu and Tlalane both worked in the corporate sector making huge steps in the financial sector. Nkazi Sokulu was the COO and co-founder of FNB before Yalu. Together with his peers the FirstRand Group they launched the insurance company and got R200 million capital support from the group to launch the insurer. However, Nkazi was not pleased by that. Tlalane had an urge of putting up something new. According to her, it is quite easier to get lost in the corporate system. Given the tough policies, it is more difficult to instill any difference in the system. Before moving to Yalu, Tlalane Ntuli served as the Head of Growth on the life executive committee of FNB. Sales, retentions, and marketing of all products of FNB Life were some of her daily responsibilities. The two developed the idea of coming up with Yalu at lunch break where the duo had an urge to think and design a product that would offer more steps to the customers of the insurance sector. They knew that many customers were not aware that there was a gap. Credit insurance products can be both compulsory and voluntary in South Africa. Not many credit providers insist on possessing a mandatory credit life insurance. According to research carried out by Yalu, around 90% of clients were not aware that they pay for credit life insurance where it was not mandatory.
Sokulu and Tlalane believe in health partnership as a backbone of running a business. They both agreed that trust amongst partners is what makes the running of business smooth. According to Sokulu, he has previously worked with people who have impressed him with their knowledge and at times with those who have intimidated him with their unique intelligence. However, he knew that he had to work with a person who he would trust. Nkazi recalled the days when his firm was becoming bankrupt, and there was no immediate funding. He said that that was the most stressful period of their journey. They were anxious about how they were going to sail over the coming months and how they will honor their duty, but the important part was how they were going to make a step. According to the two, that is the period when one knows the importance of the partner in the running of a startup. They added that it is crucial that people work with partners who are fully supportive. Tlalane added that it is crucial that both bring certain skills to the table. In most of her employment period, Tlalane has worked in the sales and branding department of the insurance sector. Her colleague has handled many profiles in the same sector with operations being his main focus. Tlalane added that Nkazi is the head while she is the heart of their startup.
Quitting their jobs in December 2017, gave them enough time to focus on the idea of putting up Yalu. Luckily enough they have managed to get the right investor who has the same interest on what they are working on. In May 2018 PIC gave them seed fund and a long process of sourcing for the capital. A lot of people think that Yalu is an agent, but in the real sense, it is an insurance company. Yalu has collaborated with Old Mutual and has the right to the insurance requirements for issuing out the insurance product through the partnership. Moreover, Yalu has produced the license of Financial Service Provider. Currently, the whole business is made up of team members. They currently depend on digital marketing to promote their products. This is because it is challenging to go head on with bigger players of the industry in heavily advertised campaigns. Educating their clients about the presence of a need is the first important step to them. They are focused on stabilizing their UX and site for the onboarding clients. Currently covering personal loans, they are looking forward to expanding to other credit products such as credit cards and student loans.
