Insurance engine hopes to revolutionise the industry
The ultimate goal for any broker or adviser is to offer the best product which would ideally suit the specific needs of a client. The South African industry has a long history of this, which can only be improved upon by a landmark offering, developed by global auditing giant Deloitte.
Deloitte has developed a programme called the Insurance Engine in response to targeting specific areas of growth within the insurance market. The engine is a computer based system aimed at improving the industry by giving brokers and advisers the capability to offer their clients the best product for their needs.
This would essentially create a ‘perfect’ industry whereby policyholders receive the best cover to suit their exact needs. While many might feel we are far away from an ‘ideal’ industry, Deloitte feels it’s closer than what many think.
Four pillars to engineer growth
Deloitte Financial Services Team – FIST Capital Markets Director, Pravin Burra, points out that the engine is made up of four elements.
The most important element is the first element, which is analytics. This is the function which takes all of the information that is gathered by the broker or adviser through normal interactions with clients, and feeds it into the system. The second element is the engine itself which takes all of the information and calculates which product would best suit the client. The third element is then the distribution model on how best the product can be distributed to the client. And the fourth pillar is the reporting pillar which then allows for feedback on the customer’s experience.
"The Insurance Engine must be seen as a growth engine which can achieve a number of objectives. Obviously, the primary objective is that the right customer is targeted for the right product, and that the insurer can balance this need with the need to make a profit,” says Burra.
The engine was developed by Deloitte in Europe after the company saw how a similar engine had a positive impact on improving the television and telecommunication industries. Deloitte then took the concept and adapted it to the insurance industry.
No limitations to hamper growth
The ultimate goal of the engine is to both improve the customer experience, and to assist brokers/advisers to grow their business. Raymond Wennekes, who is employed by Deloitte in the Netherlands and is responsible for the distribution of the product in the Europe, Middle East and Africa region, points out that the engine has very few restrictions.
"This engine can be used across the board and will be a welcome inclusion to the short-term industry, the life market, as well as medical, investments and retirement. A broker or adviser who is not particularly strong in one industry can still offer the best product to the client by making use of the engine,” says Wennekes.
South African application
Burra points out that the South African office of Deloitte saw this engine towards the end of last year, and thought that it would be a perfect fit for the local market. The product is developed and marketed to the industry by Deloitte and was introduced to local insurers during the middle of February by Wennekes and his Deloitte associate Mark de Koo.
But how receptive will the South African market be towards this product?
"From a growth perspective, the advantages are there for all to see. The only concern would be the time and effort it would take to implement the product. Deloitte South Africa feels that the South African market is between 80% and 90% ready for the product. It is only the mechanics which need to be implemented. And this is a short task which may only take up to 15 weeks. There are no mainframe changes and the engine can be used with a company’s existing IT infrastructure,” says Burra.
Wennekes adds that this also has the potential to change the way in which insurance is approached in the country. "Traditionally, industry stakeholders would approach the industry from the viewpoint of: I have a product, how can I effectively sell this product to suit the policyholder’s needs. The Insurance Engine looks at it from the perspective of: these are my policyholder’s needs, which product will best suit them?”
Fitting in with the changing landscape
How will this engine fit in with the changing landscape of the insurance industry?
Over the past two years, the Financial Services Board (FSB) has been on a mission to improve the industry and is in the process of developing pieces of legislation which would facilitate this improvement. One of the most important pieces of legislation is Treating Customers Fairly (TCF) which hopes to change the way in which insurers regard policyholders.
"This engine fits in perfectly with the objectives outlined by TCF. The policyholder is offered the correct cover and there is little space for direct marketing of products which the policyholder simply does not have any need for,” says Burra.
Another aspect which needs to be taken into consideration is whether the engine would adhere to the principles set out by the Protection of Private Information (POPI) Act which is due to be passed into law by Government shortly.
"All of the information gathered for the engine is part of the everyday routine of the broker or adviser, so there is no element of irresponsible information gathering. The engine then uses this to supplement existing information in order to ascertain the correct product. This information is kept in a safe and secure way, which is a feature of the financial services industry. So this engine fits in well with POPI,” says Burra.
Editor’s Thoughts:
The
improvement of the industry has been a key objective of the FSB and insurers
for some time now. We are finally seeing some of the fruits of these ambitions
coming to light. If this product is marketed effectively, there is little doubt
that insurers will find it appealing as it improves the relationship with
policyholders as well as their relationship with brokers and advisers. This can
also be used as an effective tool for brokers and advisers to achieve profitable
growth. Please comment below, interact with us
on Twitter at @fanews_online or email me your thoughts [email protected].
Comments
Deloitte will be charge companies on a time materials basis. Basically, how much time they take to implement the system at your company.
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