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Partnering InsureTech To Deepen Insurance Penetration



Insurance companies must partner Insuretech in the ongoing global digital innovation and disruption if truly, insurers are serious about deepening penetration in the country. ZAKA ABD-KHALIQ writes.

No doubt, the world is already a global village. In the comfort of your room, you can request for services that were, before now, literarily done through human contact.

Technology is taking man to the space where the relevance of human contact, especially, in the service sector, is undermined.

Currently, the dominance of digital innovations, such as online sales technologies, machine learning, the Internet of Things, advanced analytics and virtual reality, among others, in the provision of products and services are visible enough for everybody to see.

These innovation are, on a daily basis, continuously disrupting the financial service sector space. Banks have reduced their workforce thanks to these disruption as machines are gradually taking over jobs that were predominantly done by man. The same applies to all sub-sectors of the financial system of which insurance sector is not isolated.

According to the managing director/CEO, Access Bank Plc, Mr. Herbert Wigwe, businesses and economies compete in a networked world in which the key to competitive advantage is no longer the sum of all efficiencies, but the sum of all connections.

Strategy, therefore, he stressed, must focus on widening and deepening linkages to access ecosystems of technology, talent and information.

“Today’s decision-makers must let go of the traditional linear thinking of change and think strategically about the forces of disruption and innovation and how it can enhance their businesses,” he said.

While these disruption could lead to job loss, as some professions and jobs would be rendered redundant in the future, experts said, it further creates job opportunities elsewhere of which only proactive companies can explore, while improving service delivery to customers in the process.

How Digital Disruption Affects Insurance Businesses

The Commissioner for Insurance, Alhaji Mohammed Kari, at the recent 2019 National Insurance Conference in Abuja, said that the need for radical reforms has been accentuated by the disruptive impact on the insurance industry of a series of digital innovations

These new technologies, he added, are already making it easier for consumers/policyholders to benefit from superior service and more choice as well as lower prices,

Therefore, in order to remain relevant and become a critical contributor to the national economy, he charged the industry to consciously be proactive and organised so as to take advantage of the opportunities provided by these disruptive developments while at the same time curbing their corresponding negative impacts.

Insurers, he said, will only benefit from digital technology only if they embrace its potentials along the entire insurance value chain, including underwriting and claims management.

The 4th African Insurance Barometer, a research report on African insurance industry, launched at the 46th Conference & General Assembly of the African Insurance Organisation (AIO) in Johannesburg, South Africa recently, said, at a time when technology and the need to upscale and efficiency motivates insurers to consider regional expansion, protectionist tendencies and a lack in regulatory coordination or harmonisation threaten to hold back development.

Technology and new product development, it said, are seen as the key opportunities to access and appeal to new customers, both in commercial and personal lines and therefore address the continent’s low insurance penetration.

The chairman, Insurance Industry Consultative Council (IICC), Mr. Eddie Efekoha, said, to capitalise on the great opportunities this cocktail of disruptions provides and to respond to the economic and social challenges we face today, courageous and comprehensive reforms are needed. These reforms, he stressed, require the collaborative efforts of governments, businesses and other stakeholders in society in order for the process to be truly successful.

Partnering Insure-Tech For Penetration

The managing director/CEO, Access Bank Plc, Mr. Herbert Wigwe, charged insurance companies to recapitalise as well as seal strategic alliances and partnership with Insuretech to deepen insurance penetration in the country.

Wigwe noted that with only one per cent of Nigerians holding an insurance policy, there is clearly an untapped opportunity in the country.

While calling for strategic partnership and alliances with tech partners, Wigwe said, with the advent of innovation, traditional insurance companies must partner with upcoming insurtechs so as to explore the technological and growth opportunities therefrom and give customers better and more innovative product offerings.

Claim verification processes must also be reviewed to foster trust and partnership with the Banks for viable Bancassurance opportunities are a formidable route to growth, he pointed out.

According to him, “Insurance companies should make more use of the new media and ‘digital’ to deepen insurance at the retail segment of the market. Furthermore, the need for the implementation of a robust compulsory insurance policy cannot be overemphasised.”

Going Forward

Kari said while these new technologies are already making it easier for consumers/policyholders to benefit from superior service and more choice as well as lower prices, there are corresponding challenges. He listed the challenges to include; cyber risk and crimes, determination of liability in driverless car accident, emergence of inter-sectoral competitors as well as disruptive social and technological changes.

Meanwhile, the federal government has charged insurance companies to adopt technology in a bid to insure about 200 million uninsured Nigerians in the country.

President Muhammadu Buhari, while speaking at the 2019 National Insurance Conference in Abuja, recently, noted that the fact that insurance penetration in the country is below one per cent presents enormous opportunities for underwriters to deepen insurance penetration through digital technology.

Buhari, who was represented by the permanent secretary, Federal Ministry of Finance, Mr. Mahmud Isa Dutse, urged insurers to imbibe innovation and technology that would deepen insurance penetration faster, thereby, increasing financial inclusion.

Stating that proper adoption of digital technology will allow underwriters provide quality services to their clients, he added that, technology can also make claims payment process and procedure seamless and faster.

To him, it is imperative to introduce new innovative products that meet the needs of the masses so that 40 per cent financial inclusive growth is achieved through the insurance industry by year 2020.

While charging underwriters to put in place strategies to control risk of technology, when adopted, he added that, the expectation of the federal government from the insurance industry is to see increased capacity of local insurers to underwrite big risks which would be achieved through the ongoing recapitalisation in the industry.

“Insuretech start-ups are leveraging technology to gain market share. Relative to the size of Nigerian economy and opportunities, insurance companies must recapitalise to increase capacity to write insurance businesses in Oil and Gas, Aviation and Marine sectors of the economy. Traditional insurers must partner with upcoming startups to explore growth opportunities that technology provides,” he pointed out.