The jury is still out over whether InsurTech is still ‘a thing’ or whether its day came and went. Has it already been absorbed within the insurance sector to form a core part of the systems used by insurers on a daily basis? Or is there still room for smart start-ups to add value to insurance processes?
Whichever view proves to be accurate, InsurTech was never really at the cutting edge in the MENA region anyway. Successful InsurTechs that gained a foothold in the region were often branches of companies headquartered elsewhere – which may say as much about the level of technology education in the region as it does about the encouragement of entrepreneurial flair.
A recent report, the Fintech 2022 Emerging Venture Markets Venture Investment Report from MAGNiTT, suggests that the Middle East, Africa, Turkey and Pakistan saw funding deployed and the number of deals closed by fintech start-ups reach a high in 2021, growing by 550% and 56% y-o-y respectively. In the first half of 2022, $1.68bn was invested in fintech in emerging markets.
Interestingly enough, 32% of the fintech deals and 49% of the funding across MENA in 2021 were focused on the UAE. The establishment of various onshore free zones in Dubai, for instance, means that start-ups can retain 100% ownership of the company without the arcane practice of engaging a local partner.
This is undoubtedly a major attraction for budding entrepreneurs.
Saudi Arabia’s venture capital specialist firm STV believes that, “MENA is one of the most attractive markets for the development of technology ventures – it has now reached an upward tipping point in its growth trajectory.”
It goes on to say, “We believe the region can output 45 unicorns by 2030 and can create digital giants that can list on public markets, remain independent, and keep their focus on delivering innovative solutions tailored to local needs.”
Making these dream a reality will require infrastructure – and that is where initiatives like Abu Dhabi’s global technology ecosystem, Hub71, will come in.
Hub71, which was set up in 2019, says that it, “Enables founders to build globally enduring homegrown tech companies in any sector by providing access to global markets, a capital ecosystem, a global network of partners and a vibrant community filled with highly skilled talent, governed by forward-thinking regulation.”
Already 170 start-ups call Hub71 home. Readers of MEIR will already know about the DIFC FinTech Hive, which performs a similar function to Hub71.
The key to success, however, will lie in InsurTechs making their way to the front of the queue when it comes to both attention and funding – since there are many rivals in the broader fintech space. Payment solutions, for instance, presently account for over 40% of new fintech funding across the spectrum.
The region already has examples of InsurTechs achieving real success – such as Egypt’s Amenli which operates in the insurance brokerage space, Qatar’s Anoud, which offers technology solutions and Bahrain’s Tasweya, which readers will be familiar with.
Time may be running out for InsurTechs to reach scale in the MENA region – before it is too late.
Paul McNamara
Editorial director
Middle East Insurance Review