Technology is changing the industry
Since the invention of the internet, the world has slowly gravitated towards technology and has allowed it to shape the way that the world communicates and is run. With the movement towards the mobile revolution, this will only increase over time.
While technology has had a major influence on developed markets, it is still growing its presence in the South African market. Recent developments in telematics can potentially revolutionise the South African insurance industry and the way in which it interacts with its clients.
Comprehensive cover
One of the biggest problems in the South African market is that it is generally under insured. Shocking statistics show that only 13% of South African road users are insured.
This means that there is a 66% chance that the other insurer does not have any form of insurance. This means that you will have to become involved in a lengthy legal process in order to take the guilty party to court where you will most likely have to settle for a payment plan of R50/m until you are able to claim full damages out of the case. Owners of property which is damaged in a collision involving uninsured vehicles face a similar outlook.
This sad state of affairs strengthens the industry argument that Government needs to pass legislation which makes third party insurance compulsory.
This will have a significant impact on the industry, provided that it is implemented in the correct manner, which is the major challenge which faces the industry.
Over the past few years, the South African insurance industry has started adopting international legislation to see how it would benefit the South African market.
International solution
The US market has come up with a novel solution to deal with the same challenges that face the South African market. Lloyd Chumbley, Vice President of Global Development for Accord paints a picture where fraud is also a problem facing the US motor industry. When consumers register a car in the USA, they have to produce an insurance card. Once the car is registered, there are some consumers who destroy their insurance card and cancel their insurance payments.
“We have developed a data standard in the USA which allows police to verify the validity of the insurance cover that the driver has. Once the officer scans the licence, it is sent in real time to the insurer who validates the validity of the cover,” says Chumbley.
However, this is backed by a legislative framework which makes it compulsory to have insurance when you purchase a vehicle. If the South African markets wants to adapt US regulation, it will need to be adapted to suit the South African market.
“Accord is committed to offering products which suits the industry. Accord South Africa will take the data standards and work closely with Stride, the FIA, the FSB and SAIA to customise the program to suit the South African market,” says Alan Stitzer, Accord program manager for South Africa.
Smart differentiator
Another technological aspect which will grow in prominence is telematics. While telematics has an established presence in the South African market, Oakhurst feels that telematics will grow in prominence.
CEO Brad Hogan points out that insurers are increasingly using telematics as a differentiating factor within the industry. “If we follow the trend of the US market, telematics will experience a significant growth spurt within the next few months. At the end of 2012, the US market had 1-million devices which were used in the market. By the end of this year it will be about 5-million devices. This shows that the international market is plateauing,” says Hogan.
This means that insurers can tailor make packages to suit the client. Telematics has the advantage of offering a wealth of information such as how hard a driver brakes, how a driver accelerates, how far a driver travels every month. “We have seen that there is a desire for drivers to be rewarded for the way they drive. By using telematics, we can achieve this.”
Editor’s Thoughts:
There is no doubt that technology can improve the industry. However, it may be hard to implement the propositions mentioned above in the South African market.
If the South African government follows the US data policies, will it be able to be effectively enforced in the local market without constant reports regarding poor implementation, gross negligence and corruption? Will brokers need to make disclosures to clients regarding the sharing of data with the police force?
With regards to telematics, what will the effects on the price of insurance premiums be if telematics are made compulsory? One thing is for sure, the technological advancements mean that brokers will need to up their games and familiarise themselves with relevant changes in the industry in order to gain an advantage over going direct, because with the age of Google, going direct often becomes a very easy option. Please comment below, interact with us on Twitter at @fanews_online or email me your thoughts[email protected].
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