ImpactAlpha, June 8 – Fires are common in slum communities, which are home to roughly a billion people worldwide. The fires, often started by mishaps with candles or cookstoves, spread between densely packed homes and can hurt or kill people and quickly destroy hundreds of structures.
Lumkani, a Cape Town, South Africa-based startup, has raised an undisclosed amount of seed funding to expand its business of selling networked heat detectors and insurance to residents of informal settlements and slums.
Launched in 2015, Lumkani initially sold its community networked heat detectors to alert informal settlement residents of nearby fires. The company was created after a particularly deadly fire in one of Cape Town’s largest slums in 2013. It has since sold 17,000 devices.
In late 2016, Lumkani partnered with insurer Hollard to design and launch a first-of-its-kind insurance policy to protect fire victims in slums against loss of life, home, and assets. Lumkani also employs sales agents and first responders in the communities where its devices are sold.
Lumkani raised the funding from South African venture capital firm 4Di Capital, Accion Venture Lab, and Lireas, reinsurance firm Hannover Re Africa’s venture invesment arm. Lumkani’s co-founder David Gluckman told ImpactAlpha the funding would support growth of its insurance policy sales from hundreds of policies today to several thousand over the next 12 months.
A growing number of insurance products are being developed to serve low-income customers and people otherwise underserved by mainstream financial products. Leapfrog Investments has raised more than $1 billion to invest in emerging markets insurance and financial services companies. Some of its most recent investments include Ghanian micro-insurance provider Enterprise Group and South African insurer AllLife.
Micro-insurance providers BIMA and Pula recently raised funding to expand their insurance product lines for low-income customers. And the African and Asian Resilience in Disaster Insurance Scheme and Munich Climate Insurance Initiative recently launched “climate shock insurance” products for small farmers and low-income communities that suffer from natural disasters respectively.