Simplicity: “Intimidating” and “complex” this is the main theme associated with insurance which barricades prospective customers. Therefore, for successful implementation of insurtech solutions, it is required that it is presented in a simplistic manner that even a “layman” can have the capacity to comprehend its use, regardless of their background
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Insurtech: Prospects for growth In The Zambian Market
Analysis in brief : : Increasing digital adoption in Zambia poses opportunities for the growth of the Insurtech segment over the long term. Traditional insurance models are increasingly integrating automation, magnifying the Actuary’s role in the sector in the areas of underwriting, reserving and risk management. The time has come for Zambia’s insurance industry to embrace the future!
Insurance industry’s contribution to Africa`s Gross Domestic Product (GDP) is just below 3% compared to the global average of 7%. Within the context of Zambia meanwhile, consistent with the FinScope 2020 Survey, the country’s insurance penetration rate stood at 6.3% in 2020. Despite these relatively low figures, increasing technology adoption is a bright spot for the sector as more individuals come online, gaining access to the internet.
The rising mobile internet penetration rates of over 53% in Zambia, according to the Zambia Information and Communications Technology Authority, pose considerable opportunity for the growth of Insurance Technology (Insurtech) over the long term. Insurtech is the application of technological innovations to improve the service, efficiency and customer experience within the insurance industry, largely by removing the manual elements involved in the insurance process.
Eager to harness the opportunity for growth of innovative insurance products and services, more players are keen to expand in the African market. In May 2022, Africa’s gigantic insurer Discovery Limited, announced the launch of its health insurance cover in five new African markets: The Democratic Republic of Congo, Ghana, Kenya, Nigeria, and Zambia. Additionally, in May 2022, a Sanlam-Allianz joint venture was unveiled, amalgamating a German insurance giant, which has a presence in 170 countries, with the largest insurer in Africa. They will create a combined group equity value of €2 billion ($2.1 billion). According to FurtherAfrica In 2020, the African insurance market reached a value of US$70 billion, with a projected compound annual growth rate (CAGRs) of around 7%.
The benefit of Insurtech
Assistance in decision making is the key offering presented by insurtech solutions to its customers. One such example is that the technology offers real-time comparisons of various products and price-points. One example of such an insurtech is in South Africa “CompareGuru” which offers comparison of different insurtech products.
Insurtech has led to the provision of bite-sized insurance contracts. These are very short-term types of insurance policies which can have a cover period of a day, a week or a month depending on necessity.
Additionally, Insurtech presents an online advisor who can chaperone clients via their small claims procedure rather than necessitating their physical presence at the insurer’s office. This offers great savings by means of the policyholder's time in addition to their money.
Keys to success for Insurtech
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Customer-centric experience: All insurance products must be made in a manner that the customer’s satisfaction is the utmost priority. This necessitates an exhaustive comprehension of the market to be targeted in addition to their needs. Furthermore, precedence is placed on customer delivery and an enhanced customer experience for insurtech.
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Automation and innovative solutions: Insurtech offers fastened processes that ordinarily would be done manually such as claims management.
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The Actuary’s value in Insurtech
Whereas traditional insurers are gradually executing the software from insurtech companies, Insurtechs are working hand-in-hand with actuaries who are assisting them to navigate the future. As Insurtech offers more automation which is very attractive to the customer this magnifies the actuary role. Since Insurtech intensifies the accessibility of insurance services, the underwriting and risk management will be necessitated to be executed by an Actuary behind the scenes and in real time.
Moreover, insurtech provides an Actuary with easy access to data as there is a platform where the data is stored from the user interface. This allows more accurate pricing which is capable of changing on a daily basis with real time data. For example, Motor insurance in the global market employs telematics. To track the movements of the motor vehicle to observe the drivers behaviours and insert a risk rating based on their driving patterns. This essentially creates a new way of pricing based on how well a client drives and not only according to homogeneous factors such as the car value. Within the Zambian context no insurer is implementing these types of applications hence the room for improvements.
Time’s up for waiting in long lines and late claim payouts. The hour has come for Zambia to move into the future!
