Disrupting the insurance industry

Insurers must rethink their business models, operating models and customer engagement methods in order to maintain and gain market relevance

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Godfrey Kioi Heritage Insurance Kenya managing Director and Non-Executive Director Gayling R. May during the launch of the Auto Correct solution in Nairobi.

The insurance industry is undergoing a revolution and like in other sectors, technology is the disruptor. Building on the growing popularity of financial technology (FinTech), technologies for insurance also InsureTech are used to describe the blend of insurance and technology.

With different economies heeding to different innovations, Kenya is not left out. Heritage Insurance Kenya did in July the 23rd 2019, launch the first ever mass-market telematics insurance solution at Liberty House, Nairobi, becoming the first insurance firm in Kenya to get into mass-market full underwriting-based motor insurance powered by telematics.

Telematics is the branch of information technology that deals with the transmission of computerized information over long distances, as a method of monitoring a vehicle.

It combines the use of a GPS system with on-board diagnostics that can record – and map – exactly where a car is and how fast it’s traveling, even cross referencing how a car is behaving internally. Vehicle telematics applies such systems to vehicles using a wide combination of telematics devices and mobile phone technology.

“Heritage’s Auto Correct promises 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,” said Godfrey Kioi, Managing Director Heritage.

This technology uses mobile-like connectivity to enable robust, accurate driver journey scoring that rewards and encourages positive driving safe behavior, streamlining the sector’s claims processing issue whilst providing reduced insurance costs for safe drivers through premium cashback.

According to the company, this value-added service is aimed at reducing the perennial premium collection problem in the insurance industry and is open to all private motor vehicle owners. They may potentially get up to 15 percent cash back on annual paid premiums at the end of their policy period, if they drive safely.

While telematics is cemented in the developed economies, progressive economies in Africa are on the cusp of its adoption. In South Africa, telematics technology as used to track vehicles is already highly advanced and widely used, almost rivaling advanced nations.

Other technologies disrupting insurance globally include;

Chatbots

When considering distribution of microinsurance products, there is often a struggle between low-touch approaches like USSD (Unstructured Supplementary Service Data, a mobile communication technology used to send text between a mobile phone and an application program in the network) which can be key for maintaining viability of low-premium products, and high-touch approaches like agents, which are often vital to establish consumer understanding and trust. Chatbots provide an interesting opportunity somewhere between these models.

 Artificial Intelligence (AI) and Machine Learning

Advances in AI and machine learning are making it possible to leverage new and unstructured sets of data. For example, Zhong An, the first online-only insurer in China, is using machine learning to customize pricing on products for online retailers—leveraging a consumer’s purchase history to gauge individual risk around returns and warranties.

Sachet packaging

Insurance consumers today prefer to purchase items frequently in small quantities as opposed to bulk due to irregular income streams and competing needs leading to offerings in “sachet” sizes, or the trend of sachet marketing.

In microinsurance, offers products in short-term policies often payable in daily, weekly, or monthly amounts. These preferences could translate into “on-demand” insurance that is turned on or off depending on consumer need. As smartphone penetration increases in emerging markets, additional opportunities may be unlocked for similar protection of houses, livestock, and other assets for low-income consumers.

Internet of Things (IoT)

Insurers are leveraging IoT devices to harvest data, reduce risk, customize communication with customers, and improve customers’ overall experience. IoT has one of the clearest and most impactful roles to play in insurance for years ahead.

These trends provide a glimpse into the future of microinsurance, a future where technology is fully leveraged to enable new types of products that meet consumer needs, to deliver improved customer experience, and ultimately include and protect more emerging consumers.

CIO East Africa will on September 19th 2019, host the premier regional InsureTech Forum bringing together the vast insurance industry stakeholders and policy makers across East Africa players to provide a platform where the insurance ecosystem will congregate and explore areas of collaboration, share insights and identify technology trends affecting their businesses.

The event themed to Connect the Digital Future of Insurance Today, will also play host to top tier players of the tech industry who will explore the trends impacting insurers and how to effectively identify, adopt and benefit from the implementation of such disruptive technologies.

For more information, log onto https://events.cio.co.ke/event/east-africa-insuretech-forum/

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