The global insurance industry – like every other sub-sector of financial industry and commerce, is feverishly focused on leveraging off benefits of digital environment, and has seen emergence of risk carriers that are changing the underlying insurance product.
A great example of this is telematics insurance, which is a type of motor cover that takes advantage of devices such as smartphone apps, smart tags and onboard car diagnostic tools.
A study carried out by The Digital Insurer has shown that in a rapidly changing world, underwriters must adapt business process transformations and become agents of change.
The global insurance industry – like every other sub-sector of financial industry and commerce, is feverishly focused on leveraging off benefits of digital environment, and has seen emergence of risk carriers that are changing the underlying insurance product.
A great example of this is telematics insurance, which is a type of motor cover that takes advantage of devices such as smartphone apps, smart tags and onboard car diagnostic tools.
The gadgets measure various aspects of a customers’ driving habits and send the data to an insurer. This information is then analysed to learn how carefully a person is driving and associated risk profile.
Using this, insurers adjust premiums accordingly. However, pricing is not the only aspect impacted by telematics. Insurers are also using telematics for processing and managing claims as it has allowed them to track location of stolen vehicles, gain a better understanding of accidents to recover money from the responsible party as well as provide assistance after an accident.
We have seen a slow uptake of insurtech in East Africa. However, the most notable is a large general insurer who introduced a telematics motor insurance policy in 2019.
The policy is a blend of intelligent black-box technology, driver feedback and attractive rewards aimed at improving driver behaviour, potentially reducing both accident frequency and the cost of insurance.
There has also been a rise in the number of companies offering telematic services that insurers can leverage off, some of these companies have created a smart tracker and software platform that goes beyond behavioural scoring.
It includes safety, fuel efficiency as well as a whole event-triggered rescue, repair and maintenance eco-system whose aim is to reduce costs, get better value for fleet management and private car ownership.
A KPMG publication titled The claims organisation within insurance companies, shows that traditionally claims have been at the crossroad where customer experience and business profitability meet.
The point of claim is the moment where policyholders understand and appreciate the true value of their insurance carrier — or to be let down at the most vulnerable moment of their relationship with the carrier. They are also the moment when insurance companies need to pay out, an important point considering that payouts represent almost 70-80 percent of an insurer’s expenditure including claim handling costs.
Insurers have, therefore, usually had to make a trade-off between customer experience and claim handling costs. Customer expectations are increasing rapidly, driven by their online experience with banks, retailers and other businesses outside of the financial sector that were early adopters of technology, particularly digital or mobile technology.
Today’s millennial expects seamless digital experiences and similarly expect those that they transact with to understand and deliver products tailored to their needs. Not only should products or services meet the need, but they should be readily accessible at the touch of a button.
Some insurers have recognised the importance of a customer-centric approach while settling claims, retaining and attracting policyholders and have started to leverage technology to achieve this. We are seeing new distribution channels and a rise in insurtech companies that are introducing solutions to fundamentally alter the landscape.
A good example of this is a local insurtech in Kenya that has partnered with underwriters in the region and digitised the entire chain for motor insurance from quote to claim so that customers have a seamless and improved experience.
Digital technologies have been embedded in our lives and the insurance market is in desperate need of new and innovative ways of operating, which are starting to be delivered by insurtech innovations. However, insurers moving to digital, connected enterprises need more than a systems overhaul if they are to leverage the technological revolution.
Insurtech is not the silver bullet. Insurers must also fundamentally change their business models, moving from siloed operations to fully connected and integrated enterprises. This requires a cultural change, to focus away from product and to organise themselves entirely around the customer, their experience and outcomes. Customer satisfaction and retention will likely be a more important key performance indicator than operational efficiency.
