The spark of an idea came during a lunch break one day as a simple chat morphed into a light-bulb moment that evolved into Yalu Financial Services, an insurtech company that’s quietly shaking up South Africa’s credit life insurance industry.

Nkazi Sokhulu, CEO and Co-Founder of Yalu Financial Services

Launched in June 2018, Yalu is the wonder child of co-founders CEO Nkazi Sokhulu and COO Tlalane Ntuli. As colleagues, first at insurer Old Mutual and then First National Bank, both intimately understood the banking and insurance industries and operations.

“Our experience in banking sets us apart,” Nkazi says. “We fundamentally understand the behaviour and tactics inside a bank, particularly when facing competitors.”

With a keen interest in the credit life insurance market in South Africa, Nkazi and Tlalane saw an anomaly between how the industry operated and how the customer understood it. This disconnect became an opportunity.

In South Africa, credit life insurance products are linked to lending products and act as a ‘guarantee’ to repay this debt in the event of a customer’s death, disability or retrenchment. The lending product purchased will determine whether credit life insurance is mandatory or voluntary.

“We’re constantly evolving and adapting to the realities of the market.”

However, according to research conducted by Yalu, about 90% of customers hadn’t realised they’d been paying for credit life insurance even though it wasn’t mandatory for their chosen lending product. Likewise, those who’d been sold a policy by their banks were not aware they had a choice of supplier for their credit life insurance products.

In many cases, banks bundle the credit life insurance and the lending products together, with customer choice removed. “There were a lot of un-customer-friendly packages, priced badly and sold without the customers’ knowledge during the loan process,” Nkazi explains.

“Customers were paying for something they didn’t need or hadn’t been given the opportunity to go elsewhere for. There was no competitive marketplace to give customers the best possible deal, so we saw an industry that needed shaking up.”

Nkazi’s background in financial services appears tailor-made for his role as CEO of Yalu. He has consulting experience at McKinsey & Company, insurance experience at Old Mutual and notably four years at First National Bank, where Nkazi established an insurance company within the large organisation.

“This opportunity gave me the building blocks to understand both industries and taught me how to start and operate a company,” he says. “It demystified the process and gave us the confidence to start our own insurance company.”

Yalu offers a customer-focused, innovative credit life insurance solution, providing transparency, competitive pricing and a way of covering multiple loans under one policy, thereby reducing customers’ monthly costs.

The company has created a slick tech-based offering that does not require the bricks and mortar of traditional insurance providers. “We focused on automation from the get-go,” Nkazi remembers. “Every repetitive process is automated.”

“We focused on automation from the get-go.”

Because the industry is so tightly regulated, there is a dependency on documentation, which slows down the sales and switching process. But not so much for Yalu. “We looked at everything required from a legal and compliance perspective and flipped it,” Nkazi says. “Our switch process is quick and simple, and the sales process takes less than five minutes. That’s what sets us apart.”

Today, Yalu has carved out a permanent spot in South Africa’s ZAR20 billion (€1.2 billion) annual credit life insurance industry. Underwritten by Old Mutual Alternative Risk Transfer Ltd, one of South Africa’s largest insurance companies, with seed funding from the Public Investment Corporation, Yalu was initially bootstrapped by Nkazi and Tlalane themselves.

Staff and third-party suppliers supported the operation while they sought funding. “The team wasn’t paid a salary for months, but they backed us and believed in Yalu,” Nkazi recalls. “It’s been really humbling.

“We’re here to run a sustainable, profitable business that gives customers choice and delivers value,” he continues. “If Yalu can make customers’ lives easier, then we’ll become their natural choice. Flexibility and responsiveness are paramount – we’re constantly evolving and adapting to the realities of the market. That’s part of the DNA of Yalu.”

In terms of looking beyond South Africa’s borders, this youthful start-up has a mature and wise response. “There’s still room to grow and perfect our operation in South Africa first,” Nkazi states. “This experience will enable us to be even smarter when we expand outside South Africa.”