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Moving the conversation from product to advice

01 August 2022 Myra Knoesen

From 25 to 26 July, insurance professionals gathered for the African Insurance Exchange (AIE) conference to reconnect in person or online. The theme this year was Resurgence. Resilience. Revival - “Which reflects the challenges of the past two and a half years on a local and global scale,” said Thokozile Mahlangu, CEO of the Insurance Institute of South Africa (IISA).

Mahlangu added that COVID-19 has forced us to rethink the way we approach life, both personally and professionally. “As an industry we have started viewing risk in a totally new light, which has affected every aspect of the way we do business.”

The future of insurance

Speaking of the way we do business, in a panel discussion on the future of insurance, Tavio Roxo, Co-Founder and CEO of OWLS Software said that customers are changing, and their requirements are changing. They will expect to interact with us differently in the future. 

Dr Nolwandle Mgoqi, CEO of Standard Bank Insurance Company added that the customer of today is looking for more and questioning the relevance of insurance… in other words, the value derived from insurance.

The future of insurance, according to Tavio, will be driven by:

  1. Data
  2. Tech stack
  3. Artificial Intelligence (AI)

“Technology, data and AI will be huge enablers in creating the next generation insurer to meet customer demands and creating robust end to end customer journeys,” said Roxo.

“If we are to get this right, we need to incorporate these,” he concluded.

The successful intermediary of tomorrow

In a panel discussion on the successful intermediary of tomorrow, Andrew Coutts, Executive Head of Intermediated Business for Santam (Commercial and Personal) said that “Intermediaries must be very proud of what they have done for a number of generations.”

“We, however, need to remember that change is necessary… there are challenges we need to deal with. The cost model has shifted, online presence and reach has changed, everything has become digital… the cost for the intermediary has escalated. How do you manage costs, compliance and complexities? There are different clients, with different needs. The differentiator will be risk management advice,” continued Coutts.

Pravina Nair, Executive Leader at Willis Towers Watson South Africa said, “We have to re-look at the way we operate as intermediaries. We must have in depth knowledge of both clients and risks. Are we equipped to serve the client’s needs of the future? It’s time to embrace technological trends.”

“We need to move away from being product salespeople to professionals who give advice. We have to take away the conversation from product to advice. Digitisation is critical, from a scaling and cost point of view. The hybrid model going forward, is most probably what we are going to be looking at in the future. To remain relevant, we need to embrace technology. We need to simplify things, adopt technology to bring down costs and focus on a smaller market. The playing field is changing, and we need to adapt and differentiate ourselves,” added Theoniel McDonald, Director at Wealth Associates.

The successful intermediary of tomorrow, according to Coutts, is phygital… in other words uses technology to bridge the digital world with the physical world with the purpose of providing a unique interactive experience for the user.

The future of underwriting

Day two of the conference saw Michael Reilly, Manging Director at Accenture Strategy Leading Insurance Underwriting, and Trina Bowser, Senior Manager at Accenture talk about the future of underwriting.

“The world of underwriting is poised for dramatic change. It has been the same for a long period of time. We need to find ways to adapt and change, to manage the complexities of today, to reach the customers of tomorrow,” said Reilly.

“Underwriting has historically been one of the most data-intensive areas of insurance. But when it comes to looking at investments and results, data and information handling for underwriting at most carriers is still disjointed and disconnected. It leads to inefficiencies and ineffective underwriting. The divide exists because today’s underwriting platforms have not evolved to meet the needs of a modern digital carrier,” he added. 

“Looking back, the first generation of underwriting platforms was built to provide rating systems and core policy management needed to price and administer the underwriting of policies. The technology they run on has changed from mainframe to servers to the cloud, but the platforms themselves remain focused on managing the least information necessary to price and maintain the policy. The second generation of underwriting systems was made to complement these core rating and policy systems with workflow solutions. Most policy systems in use today are in this second generation. They can manage the flow of documents and select information along the process as carriers rate, quote, and issue policies. These two generations of underwriting solutions are foundational to modern underwriting. But they don’t address the full needs of modern underwriting, which creates a growing digital gap,” he continued.

Bowser added that despite an influx of insurtech solutions, 40% of underwriters’ role is still administrative. “Underwriters have acknowledged that there is a lack of  investment in their own development and training, and this is something that needs to change. Underwriters will likely need to upgrade their tools and skill sets to thrive in this dynamic world.”

Reilly said, “To meet the needs of underwriting today, we need a third generation of underwriting platforms. This next-generation underwriting platform is essentially an underwriting-tailored big data platform that can manage all of the risk and customer information needed for risk evaluation that today’s workflow and policy systems can’t handle. In this way, the other data, models, analytics, and visualizations needed for underwriting can all be managed in a data platform that designed to handle all of this information, and which can interface with the different stages of the underwriting workflow to provide underwriters with the data and insights they need, when they need them.”

Bowser emphasised that the future of underwriting is about being able to unlock data and to utilise that data to open up a wealth of opportunities.

In his closing remarks, Reilly said, “The world is moving faster, and the risks are getting more complex. We can no longer be paper based. We need to move into a truly digital experience… there’s capabilities there.”

Writer’s Thoughts
The African Insurance Exchange (AIE) 2022 conference speakers shared insights on thought provoking topics. One of the key messages is that a new era has dawned, and change is necessary, if not critical. Another is that the phygital (combining physical and digital) model, with a blend of automation and human expertise, is gaining popularity. What are your thoughts on the future of insurance? Please comment below, interact with us on Twitter at @fanews_online or email me your thoughts [email protected].

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