The industry’s response to technology
The Fourth Industrial Revolution, described by Klaus Schwab as the growth of technology to the extent that it is possibly taking over the world, is currently one of the buzz words in the insurance industry. In a release to the media, Jaqueline van Eeden Insurance Head South Africa at Wipro Limited, gave her views on how this change is taking affect.
Emerging digital trends in insurance
There are several trends currently disrupting the insurance industry across the globe, many of which are either technology related or technology driven, which are enabling insurance companies to remain relevant and competitive.
African insurers are following suit and embracing many of these global trends in the face of a challenging and complex market environment.
“Some of the key trends that have been identified are an increased use of Internet of Things (IoT) by insurers, the use of Big Data to improve claims processing, an increasing demand on cyber insurance, the emergence of Peer-to-Peer insurance, and a growing focus on mobile applications for interaction between insurers and their customers,” said Van Eeden.
Technology as an enabler
Today’s customer uses the Internet to source quotes and research insurance companies to check for the best deals, yet research shows that most insurance purchases are still happening telephonically or through in-person interaction.
The release adds that insurers are coming around to the fact that customers prefer online interaction, and are realising the need to adapt their systems accordingly. “We will be seeing the progressive simplification of legacy systems to remove the barriers that hinder them from offering a consistent and seamless customer experience,” said Van Eeden.
As the trend for connected and smart devices continues to grow, IoT is fast becoming a transformational driver in the insurance industry. Several auto insurers have implemented new models based on vehicle telematics.
The possible applications of connected devices across the industry are extensive and have the potential to revolutionise claims processing, product pricing and fraud detection. The motor insurance industry still worried about the future of connected cars and driverless cars as the manufacturing advancements are going to reduce risk and thereby premiums for insurers. The industry predicts that motor premiums will go down significantly in the next ten years due to customer behaviour changes and manufacturing advancements in the industry.
Vast adoption
Virtual adoption across the insurance industry has also been vast, and many insurers are actively using or implementing virtual computing for operational flexibility, function standardisation, cost savings, scalability and business agility. “Small to mid-market insurers have been seen as early adopters of virtual computing services, which is enabling the ability to deliver faster claims, policy and billing services,” says Van Eeden.
She adds that insurers are facing an all-time low retention rate, backed by growing customer demand and rising concerns regarding cyber-crime. The release points out that by not capturing and extracting data accurately, insurers are not able to assess their business positioning and the associated business risks fully, including security breaches. Insurers are being forced to make operational changes which will enable them to make better use of their data, for the purpose of retaining business and staying ahead.
Traditionally insurance is sold rather than bought. With advancement in technology customers have multiple options and they are demanding changes in the behaviour of insurers to have multiple touch points now compared to the past. Insurers are migrating and upgrading their legacy systems by automating and digitising core systems. Insurers are seeing the benefits of improved efficiency and customer interaction at multiple touch points. Legacy system transformation has been slow in Africa due to perceived high costs and lengthy implementation timelines. However, many are quickly realising that the longer they wait, the more customers they risk losing, adding to their lag behind competitors.
Creating new services
With the advent of technologies like IoT, we are seeing an emergence of new services. Connected home technologies are enabling policyholders to stay in touch with things like home security systems, which reduces risk for insurers who offer home insurance. Wearable technology is enabling medical schemes to keep real-time tabs on the health and wellbeing of customers, again mitigating risk.
“We are seeing the biggest impact in the use of Big Data, though. Insurers are discovering the multiple benefits that the wealth of information available from sources such as social media is delivering. Using this information, they are able to tailor their products based on customer preferences and even offer customised rewards programs, increasing sales and customer retention significantly. It is also enabling easier and more streamlined claims processing, as information is recorded, and centrally stored and accessed,” said Van Eeden.
Editor’s Thoughts:
One thing is for sure…if you drag your feet in adopting technology, you will fall behind somewhere down the line. Please comment below, interact with us on Twitter at @fanews_online or email me your thoughts [email protected].
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