South African startup Lumkani, which addresses the challenge of fire safety in informal settlements through a combination of early-warning fire detection technology and financial services, has closed a seed funding round to provide insurance coverage to low-income consumers.
Founded in 2015, 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.
It 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.
The seed funding round involves 4Di Capital, Accion Venture Lab, and Lireas, with the funds to enable Lumkani 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.
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.
Valerie Hayter, managing director of Lireas, said Lumkani had a number of unique features which stood out for us as an investor – a terrific team, simple, yet effective technology, and a market-first insurance product.
“Above all this business has the potential to make a difference to the most vulnerable of society and at the same time save lives. With reinsurance support from Hannover Re and an excellent investor base, Lumkani is well-positioned to begin serving this underserved market,” she said.