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Changing the game

17 July 2019 Jonathan Faurie

Traditionally, the second day of the African Insurance Exchange (AIE) moves from the macro overview of the industry, and focuses on the specific interventions that insurers can put in place in order to remain sustainable.

With the growing influence of technology and the changing demands of the consumer, it is no surprise then that a major focus on the second day of the AIE 2019 conference was on doing insurance differently. 

The long road

This is not an issue that has crept up on insurers. As consumers gain more access to information and have real time access to the information that they require, insurers are put under pressure to up their game. 

“The reality is that every insurer does do business differently. However, there is a need to adhere to some basic guidelines which remain relevant across all insurers and client bases. Over the last 10 years or so, the winds of change have been blowing in the industry and we have seen significant changes in the way clients own assets, the way that they interact with insurers and the nature of risk and how it impacts insurance models,” said Anton Ossip, CEO of Discovery Insure. 

He added that the decision to do business differently is being driven by the fact that there is a closing gap when it comes to the interaction between risks and doing business for the sake of doing business. Insurers need to add value, not only to their clients, but to society. 

Dangling the carrot

By nature, humans are creatures of habit and strive towards a state of congruency – a state in which a person’s values and beliefs are consistent with the way in which they live their life. 

By nature, they are resistant to change and will resist forced change at all costs. By incentivising better behaviour, insurers have reduced claims and have improved their loss ratios. This is not limited to the short term industry where telematics has been the major driver of this, but benefits can also be seen in the life industry where clients are encouraged to live healthier lifestyles by being encouraged to make better lifestyle choices. 

Changing as the world is changing

Insurance is changing as the world is changing. This is being driven by technology and is becoming personal and frictionless. At times, insurers can feel like this change exists in a state of flux as the pace of this change is relentless. 

“It is important that insurers and brokers do not resist this change,” said Ronald Gall, MD of Claim Central Africa. “Technological change in the Australian market is being driven by brokers. The presence of prepopulated documents ahead of client meetings is not uncommon in this market. Privacy permitting, there is no reason why this cannot be a feature of the South African financial services industry.” 

This is being driven by the significant growth of data. If we look at the general growth of data (which includes data outside of the financial services industry), 90% of the world’s data has been generated over the past two years. Reports suggest that 2.5 quintillion bytes of data are generated every day. This offers massive potential for growth.A single view

However, you can have all the data in world, but it will mean nothing if it is not refined and put into a model that can be used by insurers to make specific decisions. 

“It is unbelievable how much power the client has today. They want to deal with insurers but want to feel like they are more than just a number. The most important thing for insurers is to have a single view of their client. If they fill in an online form with basic information and then contact a call centre where they will be asked to repeat that same information, the insurer will lose that client,” said Gall. 

Technology can also be an enabler in the sense that it can allow insurers to customise their systems on a client by client basis in the same way that Netflix is able to make recommendations for each user based on their viewing habits. This is something that the industry needs to work towards. 

Key learnings

In the past, insurers went to great lengths to gain insights into their clients and their behaviours. This has now been made significantly easier by technology. 

“There is a lot of concern regarding technology. But the value that it can offer is undeniable. Insurers should use technology to learn what their clients want and then expand on it. This will enhance the growth rate of the business, as well as improve employment,” said Ossip. 

Further, technology allows insurers to cover the risks that are relevant today. These risks are significantly different from the risks that were present five years ago. 

“At the end of the day, insurance has to be done differently. The world has evolved, clients and brokers have also evolved. Their needs have changed; so should their insurance,” said Ossip. 

In Big Data, insurers have been given an opportunity to gain unparalleled insight into a client. There is a debate on who the data belongs to, but if a client purchases a product that explicitly points out that data will be used to evolve the product, the debate becomes a secondary issue. 

It is all predicated on trust. Doing insurance differently is more about being open with clients and telling them what their data is being used for and addressing fears that data will be collected, stored and disposed of properly and in line with the Protection of Private Information Act. Trust takes years to build, seconds to break and forever to repair.  

Editor’s Thoughts:
There are many avenues or tactics that insurers can use to adapt their business models to do insurance differently. Innovation does not come with a blueprint, perhaps this is an opportunity rather than a challenge? Please comment below, interact with us on Twitter at @fanews_online or email me your thoughts jonathan@fanews.co.za.

Comments

Added by JohnBezuidenhout, 17 Jul 2019
Did anyone asked them to validate the nonsense they dish up ? One shuld think that professional , senior custodians of the sector should validate their guestimates by factual scientific stats ( big data ? ) .
Consumer behaviour is forced by strong balance sheets and not the other way round .
Techno usuage is a trend for the non informed .
Ask any university who did strong surveys
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