Access to insurance, climate change and consumer behaviour emerged as unlikely companions during a ‘future of insurance’ panel discussion held during the 2022 African Insurance Exchange (AIE 2022) conference, held at the Sun City Hotel and Conference Centre, South Africa, on 24-27 July. The fast-paced discussion outlined some of the economic and operational challenges faced by insurers plying their trade across Africa, confirming a wide range of views on the industry’s future. This divergence was expected given that the panel comprised a bank-owned insurer, an insurtech, a pan-African insurance provider, and a software services provider.
Nolwandle Mgoqi, CEO of Standard Bank Insurance Company, started proceedings by noting that pandemic had changed the structure of insurance, most notably by changing the way consumers worked and lived. She observed that the pivot from traditional ways of working to working from home or hybrid home-office work arrangements had changed how consumers interacted with insurance. “Spending more time at home has actually forced a lot of people to revisit the relevance of their insurance solutions and the associated cost,” said Dr Mgoqi.
The sense that this writer got from the conversation is that future-fit insurers would have to assist with economic issues such as insurance penetration and protection from systemic risks, while pandering to consumer demands in both the commercial and personal lines segments. Matthew Elan Smith, co-founder of insurtech Pineapple, said there were a couple of gaps the industry would have to bridge over the next decade. “The first one is access to insurance,” he said, before warning that insurance penetration statistics were a bit misleading. A better measure is to count the number of businesses and individuals that have adequate cover, after stripping out funeral cover.
“The second gap to ‘bridge’ centres on community and affinity, and how to bring these concepts back to the forefront,” said Mr Smith. Going forward, insurers need to acknowledge the broader community in developing and distributing product and do more to address perceptions among consumers. It will, for example, help if insurers and policyholders are on the same page insofar as the fairness and equity built into insurer’s operating models via the entrenchment of treating customers fairly principles (TCF) in the regulatory framework.
Co-founder and CEO of OWLS Software, Tavio Roxo, took a different approach to the discussion, encouraging conference attendees to imagine their insurance portfolio in 2032. The world so imagined includes self-driving cars integrated with personal insurance profiles; automated drones that respond to accidents to assist in seamless, real-time claims lodging and processing; insurance transactions in the metaverse; and technology-laden ambulances that would capture vital signs and communicate autonomously with hospitals and medical aid insurers while a patient is in transit.
“The insurer of the future performs a deeply integrated and indispensable support/social function for its clients,” said Mr Roxio, adding that to trade sustainability in this future, insurers would have to excel at data management, technology (the so-called tech ‘stack’) and artificial intelligence (AI), in that order. According to Mr Roxio, data is the fundamental building block that makes technology work, while AI is where the magic happens: “AI allows for the elimination of repetitive admin tasks that allows insurers to service customers digitally, end-to-end, bringing resilience to your organisation.”
Each of the panellists acknowledge access to banking and insurance product as a challenge, with Michael Gondo, chief innovation and growth officer for Sanlam Pan Africa, singling out distribution as a possible bottleneck. “A developed market like South Africa offers lots of distribution mechanisms that insurers can use to deliver insurance to the end consumer; but across the continent there is a lot of limitation around infrastructure,” he said. “In this context it becomes very important to leverage new ways of distribution.”
Although seen as secondary to banks, Africa-based insurers will play a significant role as the world attempts to increase financial inclusion by 2030. Future-fit insurers will need to rethink their product and service offering within the evolving macroeconomic context, and avail of the technologies available to them to make cost-effective inroads into – and offer more comprehensive protections to – the uninsured market.
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