What’s all this noise about disruption?
The digital revolution is disrupting the industry and is increasingly demanding a change to old traditional systems and business models.
With this, are we aware of the extent of this disruption and are we prepared for it? Is your company ready to meet the changes digital transformation is causing?
Peer-to-peer insurer tests local waters
Technology and disruptors are no longer just a story hitting international markets; they are now a reality in our local environment and are indeed making their way through to our local industry. Pineapple, an Insurtech start-up based in Johannesburg, is one of these examples.
Pineapple, South Africa’s first peer-to-peer insurer, has built a world’s first in achieving a flexible, scalable and decentralised peer-to-peer insurer that provides fully fledged insurance coverage to its members. The focus is to revolutionise the way insurance is done, starting with the mechanics of the actual business model. They have built their systems using technology such as AI, MongoDB and ReactNative with a Blockchain integration coming soon.
In short, they see the insurance business model and its delivery vehicles as archaic and believe it’s about time insurance was developed for the world of today rather than forcing yesterday’s solution into today’s packaging. The goal is to bring back transparency, fairness and affinity into insurance.
In collaborating and building partnerships, Pineapple has secured seed funding of R5.2 million from Lireas Holdings which will assist them in bringing their innovative insurance offering to market.
Industry sees this as a threat
There is an increasing view that insurers need to transform, go digital and make use of technology as disruption poses a threat to the industry and intermediaries at large. However, while some have invested in digital strategies to take on the threat of disruption, many have been slow to react.
Peter Scheffel, Director at Innosys says that the South African insurance industry is burying its head in the sand and hoping that Insurtech will blow over and fail so that the industry can carry on the way it always has.
“The industry views Insurtech as a threat and instead, it should be seen as an opportunity. An existing player, for example, already has all the infrastructure and the knowledge. All they lack is the mobile app that needs to be innovative and the introduction of some flexibility into their rigid back office and core systems. Specifically, it needs to reinvent insurers’ processes and discard much of their legacy way of doing business. Risk models also need to be reassessed. Existing insurers should look to disrupt themselves, by creating their own Insurtech or purchase an Insurtech with the view to reinventing themselves. If they do not, they face the risk of becoming irrelevant in the future,” said Scheffel.
Collin Molepe, Chief Operations Officer at Bryte Insurance believes South African industry players have made great strides in terms of looking at alternative and efficient ways of servicing clients.
He says with the rapid pace of innovation within the sector, the future is here and now, with several critical developments taking place including Blockchain, Peer-to-peer insurance, Artificial Intelligence (AI) removing human-to-human contact within the value chain and drones approaching risk with purpose.
So with this, we see that technology is evolving but are we ready to meet the changes digital transformation is causing?
The reality of it all
Pieter Geldenhuys, Director at the Institute for Technology, Strategy & Innovation said, gone is the world of predictability. “Predictability is no longer the basis of organisations because of disruption.”
He emphasised that disruption has already happened and is happening. It is affecting customer bases, resources, value propositions and how businesses are aligned.
“It is now a matter of what we can learn. We need to ask ourselves how we can shape the future with what we know today. How can we navigate this changing environment and adapt our mindsets?” he said.
“We have to realise that old systems will not work. We have to ensure emergent pathways. It is about addressing the needs of our client bases. Small minor changes now can lead to big fundamental changes and have a huge impact on the future. Strategies need to change,” he said.
Going forward, Molepe said partnerships will be a crucial focus, especially when it comes to insurers investing in technology on behalf of the broker. “The valuable advice of brokers cannot be discounted, what will change, however, is how technology will be effectively utilised to retain customers, provide them with quality products and ensure that interactions are as seamless as possible.”
Innovate and move fast
“The reality is South Africa has technological capabilities that far exceed that of other developing countries (mobile usage being one); the question is whether we want to embrace it at the same speed as our global peers,” concluded Molepe.
Oliver Bäte, Chief Executive Officer of Allianz SE said, “In today’s fast changing world, it is critical to innovate quickly and to change course rapidly if necessary. The insurance industry, like other customer service industries, is transforming because of the all-encompassing impact of digitalisation on our lives.”
“Today’s customers will choose a product primarily because it’s easy to use, transparent in terms of price and quality, and personalised – and because it’s available to them via the digital channels they want it from,” concluded Bate.
Editor’s Thoughts
If you have not thought about it… now is the time to do so, as disruptors have officially hit home. They will slowly, but surely, come into the market and do things differently. Are you ready to meet the changes digital transformation is causing? Move quickly, collaborate and build partnerships to ensure long term access to innovative digital technology and new business models. Please comment below, interact with us on Twitter at @fanews_online or email me your thoughts [email protected].
