Whenever I look back on the content that has been on this blog, I am often amazed at the range of industries that technology has positively influenced.
One such industry is the insurance industry. While there is no doubt that the advice of a broker or an adviser is invaluable, direct insurance and robo advise is increasing its influence in the industry.
Further, technology has allowed insurance to be sold in a number of different ways. The future looks bright.
Embrace the road ahead
Technology is driving the insurance industry forward at an unprecedented rate. The industry has never seen as much change as it is currently seeing.
This has a significant effect on many role players in the industry. I recently read an article on itnewsafrica.com; the article was written by Ashok Shah, Group CEO of APA Apollo and gave some interesting insights on how technology can improve efficiencies within your business.
Enter the omni-channel
The article points out that one of the most significant developments is the move towards the omni-channel.
However, much like the paperless office, this has become one of those technology phrases that many believe will never happen. Yet, consumers today are naturally omni-channel. They research products online, recommend and talk about them with their friends and contacts on social networks, and purchase them either via mobile apps or at brick-and-mortar retail stores.
The article adds that this integrated product approach points to the need for insurers to present customers with a range of options to engage. These can include text messages, emails, Web chats, telephones, and in-person discussions. And with artificial intelligence (machine-learning) rapidly becoming part of this environment, insurers have a variety of platforms to create a better omni-channel environment for customers.
By being able to use all these channels of communication, insurers will have a better all-round view of what the immediate customer priorities are. This will enable them to place new products in front of potential customers sooner and more directly than in the past as well as provide more bespoke offerings to existing customers.
The article points out that last year, Gartner stated that there will be 8.4 billion connected things in use by the end of 2017 with total spending on endpoints and services reaching almost $2 trillion. The market for this Internet of Things (IoT) clearly illustrates the new competitive fronts and partnership opportunities for insurers.
Already, leading technology and consumer electronics providers have a head start in engaging consumers via the likes of smartphones, tables, and appliances. All is not lost for insurers. We are seeing how telemetry data in vehicles and diagnostic data in pacemakers are used by some insurance companies and healthcare providers to customise premiums based on driver behaviour and even personal health.
The article adds that with IoT devices generating significant data, fast-moving insurtech’s have been quick to extract meaningful insights and use them for customised solutions. The more traditionally-minded insurance providers must follow suit as user expectations require this more tailored approach.
The itnewsafrica.com points out that by understanding the near‐term value potential of initial data and technology investments, insurers can chart a clear and self‐funding course on their transformation journeys and become truly digital in their strategies, operations, and cultures.
The article adds that with an array of innovation, the Kenyan insurance landscape has the potential for a sizable expansion of domestic market penetration. The country also presents a solid base for reaching other African markets, which in turn, will attract interest from further international investment.
Digital is charting the path for insurers in Africa. The success or failure of this will be governed by the willingness of the insurer to embrace this (digital) future.
Embrace change and succeed
Innovative distribution models will be one of the keys to success in an insurance industry that is being driven by technology.
Distribution models has been a topic of vigorous debate in South Africa as financial inclusion becomes a barrio of entry into the industry.
How does the industry tackle this problem? In an interview with itnewsafrica.com, Ashok Shah – Group CEO of APA Apollo – said that focusing on mobile technology is a key ingredient to success when faced with this problem.
The article points out that even though the market has become more competitive in Africa, many insurers still rely on traditional methods to reach customers. While other industries have been pro-active in their adoption of mobile technology due to its convenience and reach, insurance has generally been slower to adapt.
“Mobile technology can have a significant impact on the insurance industry by attracting new customers and retaining former policyholders. However, getting access to a mobile device is the first step towards broader financial inclusion. This empowers people to access affordable financial products like insurance. Fortunately, mobile phone ownership is on the increase across the continent due to devices becoming increasingly affordable and WiFi hotspots more available to use for data access,” said Shah
He believes the shift towards more mobile-centric insurance solutions can assist organisations control costs, increase productivity, and enhance the customer experience.
“Insurers are waking up to the potential that mobile brings. As such, there are those who are trying to replicate the success of the M-Pesa mobile money platform with solutions that rely on mobile and people’s willingness to use their devices to increase their market share,” said Shah.
And looking at the statistics, it is difficult to argue against the impact that M-Pesa has had on people’s lives. The service has enabled remittances to be sent conveniently through mobile phones and has enjoyed widespread adoption. Today, 96% of households outside Nairobi have at least one M‐Pesa account.
The article added that, unfortunately, there are still some difficulties for insurers to overcome. These include a lack of awareness of insurance, a need for easy to understand and affordable products that can be sold to individuals and families, and addressing the ongoing concern of fraud.
But in these challenges lie opportunities. Especially for insurers looking to tap into a younger consumer segment that are educated and familiar with using mobile technologies.
“With mobile technology dominating other technologies, insurers are likely to be in more direct contact with customers which facilitates a closer relationship with them. Agents and brokers will still be an integral part of the sales process because there are still products and solutions that need that direct engagement and face-to-face discussion. Insurers will therefore still rely on brokers to provide some level of intermediation,” said Shah.
However, for claims, there will be reduced intervention by both brokers and agents, unless the cover has been issued by them. This not only improves customer satisfaction but can also reduce costs associated with processing claims and underwriting. The result – an increase in overall profitability for the insurer.
“Contributing to this changing dynamic is how today’s consumers have become naturally omni-channel. They are researching product options online, recommending them to others, and talking about offerings with friends and other contacts on social media. Of course, they are then relying on their mobile apps for purchases as well. Essentially, they want as many options as possible to engage with a company using their preferred method,” said Shah.
Ultimately, insurers who use mobile technologies to create a more integrated omni-channel environment will be the ones better positioned to benefit from the growth of mobile in Africa.