Insurance for techies
Firms take aim at Africa’s ‘digital natives’
MULTI-NATIONAL insurance firms are greedily eyeing Africa’s hungry penchant for mobile devices to sell their products cheaply using technology to a new generation of tech-savvy customers dubbed “digital natives”.
While the continent’s insurance industry is largely underdeveloped, accounting for less than 1.2% of insurance premiums written globally, many firms are pinning their hopes on renewed economic recovery, on the back of rising commodity prices along with Africa’s growing young population, rising literacy levels, and rapid urbanisation leading to a rise in insurable lives and assets.
And technology is seen as the key driver to target Africa’s emerging middle class, who may look to safeguard their new-found wealth or property acquired through insurance, according to “Ready and Willing: African insurance industry poised for growth”, a 2017/2018 report on the industry recently released by PwC Africa, the global assurance, advisory and tax services firm.
The survey, developed by PwC South Africa in conjunction with the PwC Market Research Centre in Luxembourg, was conducted online between July and November 2017 and canvassed the views of insurance executives in Ghana, Kenya, South Africa, Uganda, Zambia, and Zimbabwe.
According to survey respondents, the continent’s new generation of tech-savvy customers or “digital natives” has become the new market for growth.
“Their different insurance needs and how they want insurance to be sold to them are disrupting traditional distribution and business models.
“With the rapid change in demographics, the number of connected devices is also growing.
“Digitally-empowered customers are putting pressure on insurers to respond to new challenges from affinity groups, social media networks, and other communities that connect individuals and shape opinions,” the report says.
As a result, mobile access, omni-channel access, speed, paperless transactions, transparency, and remote advice are some of the expectations of the “new” customers requiring different approaches to customer interaction, prompting dramatic changes to underwriting platforms for policy quotations and renewals, claims processing and the payment of claims and collection of premiums, which are going online, becoming accessible for their products.
Some insurers, according to the survey, are entering partnerships with technology companies to improve operational efficiency and respond quickly to changing customer expectations.
There are insurers in Africa already working with InsurTech companies, with 45% having already established partnerships to bring solutions to the market quicker.
“According to our survey, a significant number of insurers are already making large-scale changes to systems, operations, and strategy. However, the costs of moving from legacy systems, and the time and resources required for new implementations should not be underestimated.
“Challenges remain, mainly around reliance on slow outdated systems, and the difficulties and costs associated with moving old business to new platforms,” the report says.
Social media was identified by all respondents as the area where they have plans in place or are developing strategies to change, compared to just 72% in the last survey.
This client-centric focus by the insurance industry is motivated by statistics from the 2018 “Mobile Economy Sub-Saharan Africa” report, which says that the subscriber base in the region totals 444 million, equivalent to around 9% of subscribers globally, while Africa’s share of the international insurance market is under 1.2%.
But by 2020, the report predicts that that figure will number over half a billion, making Africa the fastest growing market, putting a glint in the eye of insurance firms.
The PwC report says tailoring of products to client-specific needs is becoming the new way of doing business, and customers already enjoy instant access to most of the information they need to compare or contrast brands.
Switching between insurers is easier in a digital world where brand loyalty is less important, but the report adds that making products more accessible is not the end.
Products must be easier to understand, cheaper to distribute, and appropriate for specific needs.
AN EMPLOYEE performs a ‘smart mirror’ fitness training demonstration at the Infineon Technologies AG stand at the Mobile World Congress in Barcelona, Spain, earlier this year. A smart mirror is a two-way mirror with an electronic display behind the glass. The display can show the viewer different kinds of information in the form of widgets, such as weather, time, date and news updates. Bloomberg