New Podcast: Lumkani uses fire insurance to protect families in South Africa

Lumkani leverages an IoT heat detector bundled with insurance to protect families in informal settlements from fires 

“It’s a daily event in the country — there are people being displaced every single day,” David Gluckman, CEO and co-founder of Lumkani, laments in our latest episode of VentureKast. Destructive fires are a regular, and potentially devastating, occurrence for the approximately 10 million South Africans that live in informal settlement communities. These townships are particularly susceptible to the threat of fires due to the use of flammable building materials, the ubiquity of open flame fires, limited space between dwellings, and a lack of road infrastructure for adequate emergency response.

On this episode of VentureKast, the podcast about the most innovative and impactful inclusive fintech startups in the world, I sat down with David to discuss Lumkani, a Johannesburg-based startup that leverages proprietary hardware and a tech-enabled agent network to provide customers living in informal settlements within South Africa with insurance products that protect against loss of life, shelter, and assets in the case of a home fire.

Lumkani, which means ‘be careful’ in Xhosa, originally began as a hardware company, deploying its first fire detector in late 2014. Within the first 18 months, they were able to prove that their technology “in 73 percent of cases was able to reduce the spreading of fires [beyond] the first home.” But it was not enough just to alert the community and stop the spreading of fires. David explains, “as we went on the customer was demanding more from us: ‘you can detect the fire but what is the end result?’”

With that problem in mind, Lumkani, partnered with Hollard, a South African-based insurance company, to develop the world’s first hardware-enabled fire insurance specifically designed for informal settlements. To serve clients that had been ignored by traditional financial service providers previously, the company has created an efficient, engaging, and easy to manage experience for its low-income customers. David describes how they designed the customer journey, noting that “the more you commit yourself to being a learning and listening organization, your customer will tell you how to make your business successful, because they’ll tell you what they need.”

The client relationship begins with a face-to-face interaction with a Lumkani neighborhood agent, who quickly collects the customer data needed, including geolocation of the home and photographs of the homeowner’s assets, enrolls the customer via an Android application, and schedules installation of the fire detector. Client engagement is enabled with ongoing SMS communication, including enrollment confirmation, payment reminders, and claim approvals.

In the podcast, David tells the story of a recent claim from Imizamo Yethu Township: though the homeowner was away in the Eastern Cape, Lumkani was quickly able to detect the fire and alert neighbors. They immediately began to process the claim while he was away so that he was able to begin rebuilding as soon as he returned home. As David remarks, “When you get to that level of service to a client and you build this trust — you guys came through — then you start meaning something to a client that is way more than you’ve ever anticipated.” For Lumkani, building trust in their communities is critical to serving their customers as they create a platform to be able to eventually offer them a complete suite of financial services. As David explains, Lumkani will need to evolve along with their target market, putting the right resources to work and forming the right partnerships, so they can ultimately truly provide peace of mind to their customers.