Delivering a system that works and is future-proof seems a challenging task, according to a group of Kenya market experts.
Talking ahead of the African Insurance Organisation 48th General Assembly in Nairobi, the group admitted insurers always seem to have a system project underway as they seek the solution that provides all the answers.
Too often, the group agreed, the solution works for underwriting, for finance or for back office but rarely for all of them at the same time.
Speaking as part of a roundtable hosted by Equisoft, they admitted that too often they have had “their fingers burnt”, when trying to buy the right solution. However, Shingie Maramba, director, wealth and insurance solutions EMEA at Equisoft, said there are workable solutions available.
Providing some top tips to the group, he suggested that insurers always pay vendors via escrow accounts to protect their investment and to have a timetable of measurable outcomes, only paying out once each stage has been tested and signed off.
His words of advice followed comments from Sandip Bhadury, CEO at GA Insurance Kenya, who said: “International vendors sometimes take us for fools,” adding that there have been issues with paying money for systems to vendors who melt away a few years later.
“They don’t have a physical presence in country and it is almost impossible to chase them up if something goes wrong once the system is implemented.”
Mr Maramba suggested the escrow account was the way ahead to protect the investment and to ensure there was legal recourse if things go wrong.
He also acknowledged that investment in such systems was a huge commitment from insurers operating in emerging markets after Mr Bhadury said: “As CEO or CIO, it is your neck on the block if things go wrong.”
Several others in the group agreed that they could lose their job if the process is not as smooth as expected. Vijay Srivastava, group CEO at GA Insurance, added: “It is not just technical or commercial considerations to take into account but the legal ones too.”
Dr Abiud Mulongo, head of digital at ICEA Lion Group, was also concerned that the promises made by vendors are not necessarily true. “We often get told a system is already 80% ready but then it still takes months to get the other 20% sorted and often that 80% is not actually fit for purpose.
“It is no wonder that IT project failure runs at an average of 70% globally and costs some $1trn,” he added. “If you have a budget of ‘X’, you must expect the actual cost to fives times X and expect the same sort of delays in terms of time. The final added cost will be in terms of the amount of time your internal teams will have to devote to making it all work.”
Parul Khimasia, chief development officer at APA Insurance, wondered whether the solution is in having add-ons to the core system. That, he said, would allow for the different needs of underwriting compared to say, finance. It might also allow for some future-proofing of the system.
The group agreed that might work, noting that some local providers are emerging who have an awareness of local market conditions and of affordability. However, Mr Maramba sounded a note of caution, warning that small providers might be nimble and flexible but may also disappear.
“Too often we hear of small companies where the system designer has moved onto another job, taking the experience of working with the client with him, and leaving the client with no ongoing support,” he said. There can also be challenges in meshing the “nice shiny new tools with the legacy systems that insurers all have”.
There was a general agreement among the group that many international vendors do not understand African insurance challenges sufficiently to be able to provide acceptable solutions.
Isaac Mwangi, head of innovation and growth at Sanlam Kenya, warned of a disconnect between the demands of insurers in serving their customers and the technology vendors and their products, because of the cost of investment.
Mr Maramba stressed that the Equisoft model was very different, with teams of technical experts on hand 24 hours a day, thanks to its offices from Australia to Canada, able to provide a truly round-the-clock service to clients.
While the group agreed that technology would enable them to reach more customers, particularly the next generation who are fully embracing technology across every aspect of their lives, there was also concern that there is still a disconnect.
Mr Bhadury, for example, questioned whether AI and chatbots were really working. He said he had yet to find a chatbot that really answered insureds’ needs across the continent. Mr Maramba responded saying that chatbots should be properly programmed to search out certain phrases, which then alerts the system to hand the customer onto a real person who could handle a more complex case.
He suggested that a key consideration is what the consumer wants. He admitted that, across Africa, there are trust issues between insurer and insured, but there are pockets in which the system works very well.
Mr Maramba pointed to funeral cover in South Africa where insureds will be paid out on the same day as they make a claim, thanks to clever use of available technology. He suggested that would not be possible without technology, contrasting those payouts to Nigeria where the same claim can take up to two weeks to settle because the system relies on physical claims handlers passing the claim along chains of people.
Poor perception of insurance is also holding back the market with insurers not only battling reluctance to buy insurance among those who have had a bad experience but also among those who have never even tried the concept.
Mr Khimasia believes the problem is heightened among those who live outside the cities because there is still an ignorance about the benefits of insurance.
However, Meshack Miyogo, managing director at CIC Life Assurance, fears it goes one step further.
“There is a real problem with misconception about insurance,” he said. “You will have someone tell you that they are adamant that they could never buy a policy, because they can’t trust insurers. When you question them further, you discover they have never bought a policy and are relying on third-hand information and actually do not know anything about insurance themselves.
“That is a real challenge for insurers because it requires individual conversations to break down these misconceptions. Once you have those conversations, then people will often say they would buy insurance, but it needs to happen person by person.”
Mr Maramba warned that insurers must not underestimate the power of what he called the “Braai culture”. He explained: “At a South African braai (or barbeque), people will talk, particularly if something has gone wrong. They will share the bad news with friends of family when a claim has been rejected, or delayed. That all builds an image for everyone at the Braai that insurance is not to be trusted,” he said.
Vijay Srivastava, Group CEO at GA Insurance, added: “There is also a lack of awareness about insurance and how it works. They do not see insurance as risk management but as a cost to them.”
The group agreed that technology has a role to play in smoothing the process and enabling a faster turnaround in claims payments, which would help build greater trust in the sector. However, there are some things beyond their control.
As Mr Srivastava said: “As insurers we get blamed when a vehicle goes in for repairs and those repairs aren’t done satisfactorily. We get blamed because it was an insurance claim but actually it was a problem at the garage.”
The group also agreed that insurance agents have a huge role to play across Kenya because they are meeting with potential insureds directly. Laurence Koyaroh, marketing and distribution director at Renshield Insurance Agency, supported that view.
But he called for a vetting system of some kind to root out fraud and “bad actors”. Too often, he said, a rogue agent can submit a claim to one insurer and even if it is rejected, they will simply represent the claim at the next insurer on their list, until someone pays.
He suggested that the insurance industry should work more closely together to identify and root out these people who give the whole industry a bad name.
Rose Wanda, secretary general at the Organisation of Eastern and Southern Africa Insurers, agreed, suggesting it was time insurers started to work together to help improve the perception of insurance.
“If you look at the reinsurance market, they work more closely together for the good of the whole and perhaps it is time the insurers did the same,” she said.