South African insurtech Vaai.co launches on-demand cover
An innovative insurtech startup could solve the problem of uninsured drivers in South Africa. Vaai.co has launched cost-effective cover-on-demand product, where an estimated 70% of drivers operate without insurance cover.
It is hoped the affordable, flexible cover will encourage a much higher uptake of the service, as traditional insurers in South Africa only offer expensive plans.
Vaai.co officially launched in January 2021 and enables consumers to buy prepaid insurance cover that is valid for 24 hours. The insurtech startup took part in the AlphaCode Incubate programme - an incubation, acceleration and investment vehicle for early-stage financial services businesses, powered by Rand Merchant Investment which aims to identify, partner and grow innovative financial services entrepreneurs.
Vaai.co consumers
To make use of the cover, customers buy a 'once-odd data logger' for R350. The telematics device then runs diagnostics on the vehicle to save users money on expensive mechanical and electrical damage.
The box can detect if a user has been in a major accident and dispatches a towing service if an accident happens. Vaai.co also provides roadside assistance.
Right now Vaai.co's services are only available in Johannesburg, but the company has said there are expansion plans to extend the insurtech nationally.
Customers can select insurance according to their budget and access all the services offered by the insurtech startup on the user-friendly Vaai.co app. Payments for the insurance can also be made via the app or with a cash payment that is accepted at FNB ATMs.
Vaai.co's services are not a replacement for traditional car insurance as the insurtech offers affordable basic cover on a 'per day basis only' for car accidents and is therefore applicable when driving to a location that is considered high risk.
Thabang Buthelezi, Co-founder of Vaai.co, said he hoped Vaai.co would provide lower-income households with an option to insure their vehicles, rather than driving without cover. He explained, "Insurance companies penalise you if you live in a poorer area and drive a cheaper car – they charge less to insure fancy cars in fancy areas.
"It just makes no sense to me that those South Africans who need better prices are quoted more. Plus, most of us are hardly driving our cars during Covid-19. Vaai.co developed the answer for those who can't afford ongoing car insurance and those that have had enough of the great car insurance rip-off."
Buthelezi said the low-cost cover would enable more drivers to have cover. "For less than the price of two, 2 litre cold drinks, you get R13 000 cover. If you have more money available, you can buy up to R120 000 worth of cover."
Zero fees from Vaai.co
Compared to incumbent car insurers, Vaai.co provides car insurance with zero excess fees from the day of purchase, with no debit orders.
Duncan Barker, a fellow co-founder of Vaai.co, explained, "We don't care about your claims history. We keep things very simple – you select the amount of cover you need for the next 24 hours based on what you can afford."
Meanwhile, Dominique Collett, a senior investment executive at Rand Merchant Investments and the head of AlphaCode, said, "Vaai.co is right on trend with its insurance on demand concept. We believe that there's a tremendous need for innovation in the insurance space, particularly during Covid-19 when finances are stretched to the max and existing models are no longer affordable.
She added, "Vaai.co has developed a compelling solution for South Africans with cars who want cover, but can't afford traditional insurance."
