Pineapple start-up finds insurance a fruitful venture
On a humid November afternoon in Lagos, Nigeria, Marnus van Heerden stands on stage for the Google Launchpad graduation, wearing Springbok rugby shorts, a T-shirt and running shoes. Even 7,000km from home, he's still proudly South African, and, if his attire is anything to go by, he's in a winning mood.
This is, after all, the day he and his business partners have been working towards for three months - graduation from the Google Launchpad Accelerator programme, an incubator for tech start-ups in Africa, which operates out of Lagos. Van Heerden is representing Pineapple, a peer-to-peer insurance app he founded with Ndabenhle Junior Ngulube and Matthew Elan Smith.
The three met in 2016 through a competition held by German insurance giant Hannover Re, which encouraged "disruptive thinking in the insurance industry".
The founders' backgrounds are varied: from computer science and software development to accounting and law, and they continue to work with the mentors they met during the Hannover Re competition.
Ngulube says the competition looked for people who had diverse backgrounds and little exposure to the insurance industry "because they wanted fresh eyes". After founding Pineapple, he, Van Heerden and Smith were later joined by Sizwe Ndlovu.
So what is Pineapple? It's an app that allows you to insure individual items. It's simple: you snap a picture of the item you want to insure using the app's camera. Artificial intelligence (AI) detects what kind of item it is and categorises it. You determine how much you think the item is worth, the app calculates your premium, you enter your credit card details, and you're insured.
Van Heerden describes their model as a "completely decentralised network".
"Instead of traditional insurance, where you pay money into a central pot, each member has their own wallet. When you pay your premium, that premium goes into your wallet. When a claim is lodged, everyone's wallet contributes to that claim." And whatever money's left in your wallet is yours to keep.
"It's still fully indemnified, so there'll always be enough money to pay claims. A portion of everyone's wallet contributes to reinsurance, so if wallets run out we can still pay the claims." In November, almost three months after Pineapple's launch, it had 6,000 clients, and, as of March, it has more than doubled to 13,000.
The model is based on stripping insurance to its most basic premise, which is "helping other people". Ndlovu says: "It's democratising insurance. It's going in the same direction as the sharing economy, such as Airbnb and all these facilities that put the power back into people's hands."
The team has plans beyond SA. "We shouldn't just be focusing on what services we can sell to South Africans - what services can we sell to people outside of SA? Our GDP is never going to grow if we keep on building stuff just for ourselves - we have to export. And the potential is there for us to do that."
Catching up with the team at their hip offices in Kramerville, Sandton, a few months after their Launchpad graduation, their expansion plans are on track. They have joined an accelerator programme in Connecticut called the Hartford InsurTech Hub, which links participants with US insurance companies to explore possible collaboration. Smith has been in the US pushing the brand.
One of the lessons they took from Google Launchpad was about making their app more AI-ready than it is, and Ndlovu has rewritten a large chunk of the code.
Another South African tech start-up, education app Preeva, was also part of Launchpad.
Though it can cost hundreds of millions to build a brand, Pineapple's initial investment was R5m. Van Heerden says: "About 80% of that amount had to go into developing the software and getting the ops right - so we probably had about a million for marketing . that's like a thousandth of what the big insurers probably spend."
Their marketing was initially done using social media and word of mouth (as well as a campaign where they stood at robots in Johannesburg and handed out pineapples to thousands of motorists).
"Social media has changed the game. Anyone can reach a customer - you don't necessarily have to go through TV or radio or print any more," says Van Heerden. This is probably why about 80% of Pineapple's customers are millennials.
One customer says he discovered Pineapple on Facebook. Witbank-based draughtsman Hendrik Barnard, 35, joined the service last September and has had two claims since. He was drawn to the app because of its "competitive prices".
His favourite thing about Pineapple? "The friendly staff - and it's very easy to use."
Traditional insurers have met the newcomers with curiosity, and some have wanted to collaborate. Van Heerden says "some are opposed to the model that leftover money goes back to the customer".
One of the most recent additions to the team is Yashoda Ram, who has extensive experience in insurance and is now Pineapple's chief marketing officer. "Pineapple addresses the most important element of the insurance value chain - the customer," Ram says. "As a marketing actuary, I am as passionate about maths as I am about people and behaviour. Finding a role that allows me to delve into my passion, for the greater good of the customer, is why I am at Pineapple."
Ask Ngulube what makes Pineapple a better option than traditional insurers, and he uses this analogy: "Imagine you're a tourist in SA, and I tell you to get from Sandton to Joburg CBD. And you have to either get there using a taxi and learning all the hand signals, or you can take an Uber. You'd probably choose Uber because it's easier."
• Tsotetsi travelled to Lagos as a guest of Google Launchpad...