Mastercard and Hillcroft Partner to Transform East Africa’s Insurance Landscape Through Embedded SME Coverage Solutions

For years, insurance penetration in Kenya has languished at persistently low levels, hovering between 2.3% and 2.6% as of mid-2023—a figure that remains significantly below the global average of approximately 7% and reflects the broader challenges facing insurance markets throughout developing economies. This substantial gap between Kenya’s insurance uptake and international benchmarks highlights profound structural barriers preventing millions of Kenyans from accessing risk protection products that could safeguard their assets, support business continuity, and provide financial security during times of crisis.

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The insurance penetration challenge extends beyond Kenya’s borders to encompass the entire East African region, where countries like Tanzania and Uganda demonstrate similarly low penetration rates hovering around 1% to 3%. This regional pattern of underwhelming insurance adoption is driven by multiple interconnected factors that collectively create formidable obstacles to insurance market development and expansion into underserved population segments.

Low disposable incomes represent perhaps the most fundamental constraint, as households and small businesses struggling to meet basic needs understandably prioritize immediate consumption over seemingly abstract insurance protection whose value becomes apparent only when insured events occur. Limited understanding of insurance products compounds the affordability challenge—even when individuals or businesses could theoretically afford coverage, lack of knowledge about how insurance works, what risks it addresses, and how to access appropriate products prevents purchase decisions.

Poor savings culture throughout the region, where irregular incomes and immediate financial pressures discourage systematic saving and planning for future contingencies, further undermines insurance demand. Additionally, the slow growth of alternative distribution channels such as mobile platforms has limited insurers’ ability to reach potential customers cost-effectively, as traditional agency-based distribution models prove economically unviable for serving low-premium customers in dispersed rural or informal urban markets.

Opportunity Amid Challenge: East Africa’s Insurance Growth Potential

Despite these formidable structural challenges, East Africa presents a significant long-term opportunity for insurers and financial services providers willing to invest in innovative distribution models, product designs, and customer education strategies. The region’s rapid economic growth, driven by improving governance, infrastructure investment, technology adoption, and integration into global value chains, is gradually expanding the middle class and creating larger pools of potential insurance customers with sufficient income and asset accumulation to value risk protection.

East Africa’s young, growing demographic profile provides particularly compelling opportunity, as youthful populations exhibit longer time horizons for wealth accumulation, greater comfort with digital technology enabling innovative insurance delivery, and decades of potential customer lifetime value justifying substantial customer acquisition investments. Population growth combined with urbanization is concentrating people in cities where distribution economics improve and where exposure to commercial risks—from vehicle ownership to business assets—increases insurance relevance.

Into this context of persistent challenge but emerging opportunity steps Mastercard, the global payments technology company powering economies and empowering people in more than 200 countries and territories worldwide. Mastercard has strategically entered East Africa’s insurance space through a landmark collaboration with Hillcroft (mTek), a pioneering Insurtech company specializing in technology-enabled insurance distribution across African markets. This partnership specifically targets small and medium-sized enterprises (SMEs) across East Africa—a massive but historically underserved market segment.

Embedded Insurance: Integrating Protection into Payment Ecosystems

The Mastercard-Hillcroft collaboration employs an innovative “embedded insurance” model that fundamentally reimagines how insurance is distributed and accessed. Rather than requiring customers to proactively seek out insurance products through traditional channels—visiting insurance offices, meeting with agents, completing lengthy application forms, and arranging separate premium payments—embedded insurance integrates coverage directly into Mastercard’s consumer and SME card offerings, enabling millions of people and businesses to access affordable and convenient coverage through the payments ecosystem they already use daily for routine transactions.

This seamless integration represents a paradigm shift from insurance as a standalone purchase requiring separate decision-making, documentation, and payment processes, to insurance as a natural component of financial transactions that customers already conduct. When a small business owner uses a Mastercard to purchase inventory, fuel, or equipment, appropriate insurance coverage can be automatically embedded in that transaction—protecting the purchased goods, covering business interruption risks, or providing liability protection—without requiring the business owner to navigate complex insurance markets independently.

This embedded approach marks Mastercard’s formal entry into the insurance distribution space in East Africa, reinforcing the company’s stated commitment to advancing financial inclusion and digital innovation throughout the region. By leveraging its extensive payment infrastructure—millions of cards in circulation, thousands of merchant acceptance points, robust transaction processing systems—Mastercard transforms its payment network into an insurance distribution channel with reach and efficiency unmatched by traditional insurance distribution models.

Addressing Systemic Barriers to Insurance Access

By embedding insurance coverage directly into routine payment transactions, the Mastercard-Hillcroft collaboration specifically targets elimination of traditional barriers that have historically maintained insurance penetration below 3% across East Africa. High upfront costs that make comprehensive annual policies unaffordable for small businesses and low-income households can be addressed through micro-insurance products attached to individual transactions, where tiny premiums—perhaps a few shillings per transaction—accumulate to provide meaningful coverage without requiring large lump-sum payments.

Complex application processes that demand extensive documentation, undergo time-consuming underwriting assessment, and require face-to-face meetings with insurance representatives create friction that deters busy small business owners from pursuing coverage even when they recognize its value. Embedded insurance minimizes this friction through automated underwriting based on transaction data, digital enrollment requiring minimal customer input, and instant coverage activation without bureaucratic delays.

Limited distribution networks have historically prevented insurers from reaching customers in rural areas, informal settlements, or smaller towns where establishing physical offices or deploying commissioned agents proves economically unviable given the small premium volumes such markets generate. Mastercard’s existing payment acceptance infrastructure provides instant distribution reach wherever cards are accepted—from major urban centers to remote rural trading centers—enabling insurance access regardless of geographic location.

Shehryar Ali, Mastercard’s Senior Vice President and Country Manager for East Africa and Indian Ocean Islands, articulated the collaboration’s strategic vision: “This collaboration reflects Mastercard’s commitment to unlocking financial inclusion. By bringing insurance directly into the payment experience, we are removing friction and making protective cover accessible to millions of people and businesses. From consumers buying daily goods to farmers selling their harvest, this initiative is about building resilience and supporting economic growth across East Africa.”

This statement emphasizes how embedded insurance addresses multiple use cases spanning diverse customer segments. Urban consumers purchasing daily goods can access product protection, health coverage, or accident insurance. Farmers selling agricultural produce can obtain crop insurance, livestock coverage, or weather-indexed protection. Small manufacturers buying raw materials can secure inventory insurance, equipment coverage, or business interruption protection. The flexibility of embedded insurance enables tailoring to specific transaction contexts and customer needs.

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SME Focus: Addressing a Critical Market Gap

The partnership’s explicit focus on small and medium-sized enterprises reflects recognition that SMEs constitute more than 90% of businesses throughout East Africa and play disproportionately significant roles in GDP generation, employment creation, and economic dynamism—yet face persistent, severe challenges accessing affordable insurance products appropriate to their risk profiles and financial constraints.

SMEs occupy a difficult position in insurance markets. They are too large and commercial in orientation to fit comfortably within microinsurance products designed for individual households or subsistence farmers, yet they are too small, informal, and financially limited to qualify for corporate insurance programs serving established medium and large enterprises. Traditional commercial insurance products demand premium volumes, documentation standards, and risk management capabilities beyond most SMEs’ reach, leaving them substantially uninsured or underinsured against business risks.

This insurance gap creates severe vulnerability. An uninsured fire destroying inventory, theft of equipment, liability claim from a customer injury, or business interruption from supply chain disruption can bankrupt small businesses lacking reserves to absorb losses. Without insurance protecting against such shocks, SMEs remain perpetually vulnerable, constraining their willingness to invest in expansion, limiting their ability to secure financing (as lenders often require insurance), and ultimately restricting their contribution to economic development.

By offering coverage at the point of transaction—when SMEs are purchasing inputs, selling products, or conducting other business activities—Mastercard and Hillcroft meet businesses where they naturally conduct financial transactions, eliminating the need for separate insurance-seeking behavior and leveraging Mastercard’s payment infrastructure combined with Hillcroft’s specialized Insurtech expertise to close this critical protection gap.

Insurtech Innovation and Platform Capabilities

Bente Krogmann, CEO of Hillcroft (mTek), explained the company’s mission and the partnership’s strategic fit: “At Hillcroft (mTek), our mission has always been to reimagine access to insurance in Africa. Collaborating with Mastercard allows us to scale our technology and connect with millions of consumers and SMEs through trusted payment channels. Together, we aim to deliver solutions that are simple, affordable and life-changing for underserved communities.”

Hillcroft brings critical Insurtech capabilities to the partnership that complement Mastercard’s payment infrastructure and customer reach. The company’s technology platform provides direct API integration with insurance underwriters, enabling real-time policy issuance, automated claims processing, and seamless data exchange between payment systems and insurance backend systems. This technical integration is essential for embedded insurance functionality—when a transaction occurs, the system must instantly determine appropriate coverage, calculate premiums, issue policies, and record all necessary data for subsequent claims or regulatory compliance.

Technical platform support encompasses the full insurance value chain from product design through distribution, policy administration, claims management, and analytics. Hillcroft’s systems must handle enormous transaction volumes with reliability and speed that traditional insurance systems, often built decades ago on legacy technology platforms, cannot match. Modern cloud-based architecture, API-first design, and mobile-optimized interfaces enable the responsiveness and scalability required for mass-market embedded insurance.

Co-developing innovative products with insurance carriers represents another crucial Hillcrift capability. Traditional insurance products—designed for conventional distribution through agents or brokers to customers making deliberate insurance purchase decisions—often prove ill-suited for embedded insurance contexts requiring seamless integration, micro-premium structures, and automated administration. Hillcroft works with insurers to design products specifically for embedded distribution, balancing coverage adequacy against affordability, regulatory compliance against operational simplicity, and underwriter risk appetite against market demands.

Ecosystem Orchestration: Bringing Multiple Stakeholders Together

The Mastercard-Hillcroft collaboration extends beyond a bilateral partnership to create a comprehensive ecosystem bringing together financial institutions, insurance companies, and major telecommunications providers across Africa. This multi-stakeholder approach reflects recognition that embedded insurance at scale requires coordinated participation from diverse players, each contributing distinct capabilities and benefiting from the ecosystem’s collective value creation.

Financial institutions—banks, microfinance institutions, and digital lenders—provide customer relationships, transaction data, and distribution channels. Their existing customer bases represent potential insurance buyers, their transaction flows create natural moments for embedding coverage, and their credit relationships create incentives for encouraging borrower insurance (as insured loans carry lower default risk).

Insurance companies provide underwriting expertise, risk capital, product designs, regulatory licenses, and claims management capabilities. While insurers historically controlled insurance distribution, embedded insurance models position carriers as wholesale providers whose products reach customers through intermediary distribution platforms like Mastercard’s payment network rather than through insurers’ own distribution systems.

Major telecommunications providers contribute enormous customer bases, mobile money platforms increasingly used for financial transactions, communications channels for customer engagement, and data assets providing insights into customer behavior, creditworthiness, and risk profiles. In many African markets, telecom companies’ mobile money services have achieved far greater financial inclusion reach than traditional banking, making them essential partners for mass-market financial services distribution.

Together, these stakeholders deliver comprehensive digital and virtual card solutions that bundle payments with insurance, expanding access across the region while creating commercially sustainable models ensuring lasting impact. Sustainability is critical—numerous well-intentioned financial inclusion initiatives have foundered when philanthropic or donor funding concluded, revealing that programs lacked viable economic models generating sufficient revenue to cover costs. The Mastercard-Hillcroft ecosystem emphasizes commercial viability through carefully designed revenue sharing among participants, scale economies reducing per-customer costs, and demonstrated customer value supporting retention and growth.

Multi-Sided Value Proposition

The embedded insurance initiative creates differentiated value for multiple stakeholder groups, ensuring alignment of interests essential for ecosystem success. For consumers, the collaboration provides access to affordable insurance products integrated seamlessly into everyday payment habits. Rather than viewing insurance as an occasional, complex purchase, consumers experience insurance as a natural component of their financial lives—present when needed, unobtrusive when not, and accessible without specialized knowledge or effort.

For SMEs and farmers—historically underserved by insurance markets—embedded coverage offers vital protection helping manage risk and support growth. Small businesses can invest more confidently in inventory, equipment, or expansion when insurance protects against loss. Farmers can adopt improved seeds or techniques knowing that weather insurance protects against crop failure. This risk mitigation enables economic risk-taking essential for business growth and poverty reduction.

For financial institutions, telecom partners, and insurers, the collaboration creates opportunities to deepen customer engagement, strengthen loyalty, and expand market reach. Banks offering card products with embedded insurance differentiate their offerings from competitors, potentially commanding premium pricing or reducing churn. Telecom companies add value to mobile money services, creating stickiness reducing customer switching. Insurers access massive distribution reach impossible to achieve through traditional channels, potentially transforming their growth trajectories.

Continental Implications and Scalability

With Africa’s insurance penetration ranking among the lowest globally despite the continent’s enormous risk exposure—from natural disasters and health challenges to political instability and infrastructure deficits—the Mastercard-Hillcroft venture establishes what industry observers characterize as a new benchmark for how financial services can integrate protection into daily life. The model’s apparent scalability offers hope that proven success in initial East African markets could rapidly replicate across the continent.

Scalability derives from several sources. Mastercard’s pan-African presence and partnerships provide ready infrastructure for geographic expansion without requiring ground-up market entry in each country. Hillcroft’s technology platform, once built and proven, can be deployed across markets with adaptation rather than redesign. Insurance products, once designed for embedded distribution, can be modified for new markets faster than developing entirely new products. Regulatory frameworks, while varying across African countries, share sufficient commonality that approval in one jurisdiction provides templates accelerating approvals elsewhere.

However, scalability faces obstacles including regulatory heterogeneity requiring country-specific approvals, local insurance market structures with varying openness to innovation, infrastructure limitations in some markets, and cultural differences affecting insurance attitudes. Success will require patient, sustained commitment rather than rapid rollout, with learnings from early markets informing subsequent expansions.

Conclusion: Reimagining Insurance for African Markets

The Mastercard and Hillcroft partnership represents far more than incremental improvement in insurance distribution—it embodies fundamental reconceptualization of how insurance can and should work in African contexts characterized by low incomes, limited financial literacy, underdeveloped distribution infrastructure, but also enormous unmet needs, rapid digital adoption, and growing economic opportunity.

By embedding insurance directly into payment flows, the collaboration addresses the structural barriers that have maintained insurance penetration below 3% across East Africa while creating commercially viable models ensuring sustainability beyond pilot phases. For the millions of small businesses, farmers, and consumers who gain access to risk protection for the first time, this partnership could prove genuinely transformative—building resilience, enabling investment, and supporting the economic progress that insurance has long facilitated in developed economies but has largely eluded most Africans.

As the partnership scales across East Africa and potentially beyond, its success or failure will provide crucial evidence regarding whether innovative distribution models, enabled by digital technology and strategic partnerships, can finally unlock Africa’s insurance potential or whether deeper structural barriers will continue limiting insurance penetration regardless of distribution innovation.

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By: Montel Kamau

Serrari Financial Analyst

7th October, 2025