Improving Insurance Landscape with Technology
Insurance is one of the sectors that leveraged on the challenges thrown up by the COVID-19 Pandemic to embrace technology. Ebere Nwoji reports that the sector now counts positive impact of technology adaptation.
When the insurance sector operators, at the annual mega conference usually held at NICON Hilton Abuja centered the theme on market disruption through the use of modern technology, not many practitioners and stakeholders in the industry understood where the conference organisers were heading to.
But at the end of the conference, discussants came to overall conclusion that if Nigeria insurance sector should achieve the projected trajectory growth, which has been a tall dream of the regulator, the National Insurance Commission (NAICOM) in particular and the industry operators, it needed to disrupt the existing business model which it has been using over the years and embrace a novelty model which is anchored on modern technology utilisation.
This, they said, should cut across all activities in the business of insurance such as Q1 marketing, product design, distribution and service delivery model among others.
The Commissioner for insurance, Mr Sunday Olorundare Thomas shortly after the COVID-19 pandemic, hyped on this assembling directors of insurance companies in Nigeria at a conference and addressing them on the need to adapt to new business model.
He said, “The rapid changes brought about by the COVID-19 pandemic in many fronts have drastically opened doors of opportunities for many positive thinking minds and created serious setback for many who are not able to cope with the speed at which some of these changes appeared. An obvious example is the technological advancement in the insurance industry, which has been accelerated by the COVID-19 pandemic, compelling many of us to shift from the traditional ways of conducting business to more sophisticated and technology driven mechanisms”.
NAICOM’S DETERMINATION, OPERATORS MANDATE
The commissioner informed the insurance directors that it was for this same reason that the Commission had successfully launched the NAICOM Portal on September, 1 2021; deployed to ensure effective and efficient interface between the Commission and its stakeholders.
Thomas warned operators who might choose the position of laggards in this race for technological advancement in their operation saying, “It is imperative to inform you here that any company that is lagging behind in this regard is inadvertently phasing itself out of business. Your respective attitude towards information technology funding in your various companies will go a long way in determining the longevity and existence of not only the companies, but the retention of the brand names or corporate identities. This is food for thoughts”, the commissioner warned.
Barely a year after, the commission at the end of the annual Professional forum organised by the Chartered Insurance Institute of Nigeria (CIIN) warned insurance companies operating in the country to go digital or find another sector to operate in.
According to NAICOM, that was the way to go now to position the insurance sector for expected growth and efficiency.
“We will not allow such companies to operate in the insurance sector anymore because we must adopt technology to enable optimal growth.
“The Commission has also been working to boost access to insurance through effective deployment of technology, as the Commission’s portal has been launched and effectively deployed.”
He said innovation would be the key to sustenance of the industry and make insurance services seamless by leveraging technology, which drives applications like Insurtech, FinTech, blockchain, data analytics, and IoTs, among others.
At the recent annual media retreat organised by the commission in Lagos, Thomas x- rayed the positive impact made by this shift from old to new business model by the industry operators and said the future of the insurance sector was in a shifting landscape.
According to him, the landscape of Nigerian insurance sector has shifted and is still shifting.
He informed the media that a lot have changed in insurance business environment and is still changing. According to him, one of the changes is the financial inclusion strategy and what it meant in insurance industry.
According to him, in banking sector, financial inclusion takes place at the lower level of the pyramid but in insurance sector, it is not exactly like that.
According to the commissioner, in insurance sector, only the middle class buy insurance, the lower level citizens feel they don’t have money to purchase insurance, the upper class feel they don’t need insurance while only the middle level citizens think it wise to protect what they have through insurance.
He said this being the case; the Commission was using various initiatives to upscale insurance industry to global standard.
SCOPE OF TECHNOLOGICAL DISRUPTION
At the seminar, which has the theme: The Future of the Nigerian Insurance Sector in a Shifting Landscape, NAICOM’s Director Supervision Directorate, Barineka Thompson, said the disruption change going on in insurance was not just digital but also includes harsh market conditions, demanding customers, innovative new market entrants and regulations.
He said these forces were transforming the insurance industry.
“Where there is a change, there is an opportunity and all the sources of disruptions can be harnessed to become a source of growth for insurers.
He said while no one could predict exactly what insurance might look like in a decade, insurers could take several steps now to prepare for change.
He pointed out what he tagged five competitive forces of porter in the insurance industry to include suppliers and their bargaining power, new entrants and product substitute, rivalry among existing competitors, buyers and their bargaining power as well as threats of product or service substitute.
He also noted that in insurance landscape, there were international or external operators, National and internal operators and the regulator.
He said in the same landscape there were innovation and growth, operators and competition as well as regulation.
He said the core capabilities of insurance today lay on restructuring of bancassurance model, traditional broker and agents in person distribution faces, significant competitive pressures from digital channels in personal lines, distribution partnerships with banks and retailers through over-the- counter products which have become increasingly popular.
He looked into the defining characteristics of the shifting landscape, saying new technologies were permeating throughout the insurance industry
CHARACTERISTICS OF SHIFTING LANDSCAPE
He highlighted the characteristics of the shifting landscape as emergence of digital native competitors many of which are non-insurance companies, more big data on customer activities, lifestyle and risk opportunities with which to analyse and help them better assess the actual risk level and likelihood of claims of insured.
In summary, he said the insurance eco system was evolving rapidly and that insurers could no longer lean on old familiar ways while the prevailing technological and strategic winds shift around them.
“As our often cloudy present opens up towards a brighter future, insurers should embrace technology across the customer journey if they hope to secure the trust and loyalty of tomorrow’s policy holders.
Like many industries where digitilization has taken hold, technology should not be adopted for technology’s sake, simply upgrading to the latest technological trend is not enough to sustain a competitive edge. Factors such as distribution, claims, and operation proposition, risk and capital can drive insurers’ potential for future success as they consider digital strategies, ”Barineka said.