Wednesday, January 19, 2022

Insurance industry told to innovate or lose market share

The insurance companies that use the Stone Age approach to business have been warned to move with times and adopt technology as they could lose their market share to predators in the converged world.

Chief Executive Officer of ISONBPO, Deviiner Gupta said at the Organisation of Eastern and Southern Africa Insurers’ 37th Annual Conference (OESAI) that what they banks have done to increase coverage is not a rocket science as they just adopted technology to increase penetration.

“Adopting technology is no longer a choice, but an imperative,” said the CEO of the Kenya based IT company.

Gupta said with Africa projected to have 600 million of its people having mobile phones by the end of 2014, insurance companies need to leverage on this development and use technology to increase penetration.

There is generally low insurance penetration in Africa with slow pace of technology adoption in customer on boarding, client servicing and claim settlement as one of the impediments.

According to Gupta, there are successful examples where telecommunications companies have encroached into the insurance space and are reaping the benefits of high mobile penetration.

There are also examples where micro insurance and usage of mobile platform for distribution has immense contribution towards penetration and helps to cover risk of low income group
For example, MTN Ghana along with Hollard Insurance, Microensure & MSF Africa has launched micro insurance product called “mi-Life,” which is available on MTN’s MobileMoney platform and has increased the insurance penetration in Ghana substantially.

“Insurer should leverage the success story of mobile micro insurance and use the medium to increase awareness and literacy among the masses,” he advised.

“Insurer should also expand the horizon of mobile micro insurance platform and include the regular product into the platform keeping themselves within regulatory framework and introduce new product in the market.”

Gupta observed that historically, the insurance sector has been dominated by intermediaries who have played the role of understanding consumer and business needs, and then matching and tailoring insurance products and solutions to their needs.

“With new technology and shifts in consumer preferences , consumer now prefer most of the pre-sales activities to done online and even completing the process through direct channel,” he told the conference.

“Hence it is important for Insurer to avail the product information available for preliminary information search & comparison at various price comparison websites (PCW).”

Examples of adopting technology in insurance include the use of usage-based insurance (UBI) is an innovation that uses telematics to more closely align driving behaviors with premium rates and are used extensively by Auto insurer.

Gupta said telematics can foster risk-reducing behavioral change and could move beyond auto to life and health and property lines.

He added that insurance companies can now leverage these new consumer behaviors by adding new technology driven channel in their distribution strategy and making products simple.
“This will not only help to increase the customer reachability & penetration, but reduce the acquisition cost as well. Insurer can then pass the benefit of lower acquisition cost to consumer and make products more affordable.”

He argued that insurers can leverage these new consumer behaviors by adding new technology driven channel in their distribution strategy and making products simple. This will not only help to increase the customer reachability & penetration, but reduce the acquisition cost as well.

However, participants raised challenges in the continent where there are still no clear regulatory environment governing such developments. Equally, cyber crime is still a challenge. Microtech Botswana CEO, Sereme Tekie told the conference that in Botswana, e-commerce uptake has not been good, but could not single out challenges ‘as there are no specific impediments’.

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