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Suit up to be future fit

01 November 2016 Jonathan Faurie

Charles Kettering once said: My interest is in the future because I am going to spend the rest of my life there. This is the challenge facing the insurance industry of today, how do we get ourselves future fit so that we can remain relevant to our clients? We need to design cutting edge products that keep pace with changes in lifestyles and the ever evolving nature of risk. Further, we need to tailor our advice in order to reach our clients in such a way that they feel comfortable and with a message they will understand.

These were some of the issues explored at a forum recently held by the Insurance Institute of South Africa.

Building a picture of clients

Indwe Broker Holdings CEO Peter Olyott said that the technological revolution that we are experiencing today will shape the future of the industry.

“If we try to look ahead to how the financial services industry will look in 2021, we will find an industry that is defined by the internet of things. This will include motor insurance, health insurance and household insurance,” said Olyott.

The advantage that this presents is that reams and reams of Big Data exists; if this data is analysed and interpreted in the correct manner, insurers and brokers can build a near perfect picture of their client which will assist in the personalisation of products and advice. This will be the first major step towards mass individualisation.

Digital convergence

The public call for mass individualisation is not the only future defining factor of the financial services industry. Olyott points out that the move towards the internet of things presents a perfect opportunity for digital convergence, a cross road that insurers and brokers need to eventually face.

“What will the advisory company of the future look like? We will probably see single companies that provide access to life insurance, investments, disability, health, short term insurance, estate planning and retirement with one advise fee for all of these services."

While planning for the future relies mostly on a matter of conjecture, one thing that is guaranteed is that the client will dictate how he or she interacts with their adviser in the future. Olyott warns that trying to adopt a standardised approach in the mass market will simply not work. 

Taking centre stage

One thing that needs to be understood is that insurance products, and advice, exist in a world where the economic outlook for clients is not great. Many clients are experiencing tough economic times and need their insurance products and advice to be cutting edge if they are to remain relevant. Olyott rightly pointed out that clients do not have unlimited budgets; in the future, they won’t be able to stretch their income further than it already is.  

Advocate Deanne Wood, the Ombudsman for short term insurance, said that in these tough economic times, risk management will take centre stage and will help keep companies – insurers and brokerages alike – afloat.

“There will be increased claims and increased demands for lower premiums. We exist in a highly competitive market where there is a low level of consumer accountability. There is a growing emphasis on fairness to the customer. Companies need to focus on customer centricity as a matter of urgency,” said Advocate Wood.

One of the issues that are currently becoming a serious issue in South Africa is texting while driving. According to Advocate Wood, the death toll on South Africa’s roads currently stands at 33.4 deaths per 100 000 every year and that 25% of all traffic related accidents are related to cell phone usage.

“Insurers are becoming aware of this and are starting to include exclusions that are related to texting while driving. However, the onus is still on the insurer to prove policyholder guilt,” said Advocate Wood.

Increase your relevance

Because the rest of the world is migrating to online, criminals will increase their presence on online platforms at well. Michael Barker, Founder of Michael Barker & Partners, said that the company is currently dealing with multiple cases of online fraud.

“One of the biggest issues currently is that you cannot take anything at face value. Therefore, insurers need to relook at their policies and the protection that they have on their end in terms of initiating fidelity claims against a policyholder,” said Barker.

He ended his presentation by saying that insurers need to go back to basics when it comes to establishing preventative measures that specifically deal with online fraud. He added that while some companies are good at it, some are still left in the dark.

Editor’s Thoughts:
Becoming future fit is not easy and depends on a lot of mitigating factors. This is not a short term exercise; insurers and brokers need to focus their attention on core strengths and establish how relevant these will be in the insurance industry of the future. Please comment below, interact with us on Twitter at @fanews_online or email me your thoughts

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