A vision for the future of the insurance sector: Insurance as a Digital Platform
Insurers in Africa know the opportunity in front of them, it simply cannot be missed – the sector has an untapped value worth an estimated US$68-billion (McKinsey 2020). It is a market that is expected to grow at 7% per annum for the next 5 years, making it the second fastest growing region in the world with both life and non-life products achieving ever greater levels of demand. Clearly a massive untapped market presents itself and digital will be the key driver behind most if not all penetration strategies.
Digital transformation within the insurance sector
The market potential is impressive – but there is another very satisfying angle to consider for those of us committed to a strong African financial sector, that this is an incredible sign of maturation. The demand and market projections only prove that we are on the right track with regards to financial maturity in the continent.
We start with products that push cash, consolidate assets and drive growth, and as success is achieved, we need products that protect this growth, secure these assets, and manage our risk effectively – at a consumer and SME level.
Established insurers are investing heavily in digitizing their customer journeys whilst numerous new digital insurers and insurtechs are entering the market, especially as demand rises for digital solutions as a result of a “no touch” COVID world. Insurtechs in particular have been quick to step in and offer competitive prices to customers by reducing operational cost through automation. Fast quotes and rapid onboarding, digitised loyalty programs, and claims at the snap of a picture are all great examples of innovation.
Whilst these digital solutions are providing the services customers now come to expect, to remain competitive, insurers will need to provide a user-first, omni-channel approach.
These digital platforms will need to consolidate the end-to-end value chain under one platform, from the customer, to the agent, to the broker.
Standalone digital channels can be a starting point, but the future is a digital platform
Let’s learn from other insurers that have embarked on the digitalisation journey.
Indian insurer HDFC Life started their digital transformation journey with two key goals:
Give customers a personalized, simplified, integrated purchase and service experience and transform its operating model to integrate new partners and build a platform to deliver services beyond insurance.
Their holistic platform approach got results: The share of revenue that HDFC Life receives from direct channels more than doubled; frontline staff productivity increased by 24% year-on-year; nearly 80% of policies are renewed online; and the claims settlement ratio is at 99% (Forrester, 2020).
The benefit of a digital platform against and individual channels approach are clear:
●A platform approach enables engaging omnichannel journeys through end-to-end digital operations and centralised data.
●The ability to reuse modules across products, channels and processes which will reduce total cost of ownership.
●Market acceleration enables companies to conceptualise and launch products more rapidly
Single digital channels can be a temporary working solution, but they’re not future-proof. If they’re not based on a scalable, flexible digital platform, they might even limit the company’s ability to innovate and meet new market needs fast. Channels in a silo cannot provide an integrated omni-channel experience.
The strategic play will be where a digital platform is the foundation that effectively ties the entire insurance value chain together including existing valuable legacy systems, Insure-techs, and other 3rd parties:
-Customer self-service - renewals, direct policy sales, policy management and claims submission that enable seamless processes for customers and consistent, transparent information on every aspect of their relationship with the insurer.
-Third-party service providers in the value chain – Imagine doctors in a clinic who simply ask a policyholder to provide biometric verification that is integrated to the insurers so payments for medical services are seamless and fraud free.
-Agents – digital tools that help agents serve customers with a few clicks and achieve their KPIs with ease and better productivity.
-Brokers – the relationships between broker and policy provider are critical. Gaining the lion’s share of the broker networks can be optimized not only through monetary incentives, but also digital journeys that make it easy and efficient for brokers to process and close policies.
-Embedded insurance - integrating insurer offerings into other market ecosystems within the context of customer journeys as complementary products e.g. while buying a ticket, applying for a mortgage, etc.
Tying the loose ends with a platform approach
For insurers looking to digitalise their services, an omni-channel approach is the only solution to remain competitive and provide the package of solutions customers now come to expect. To do this, however, insurers need to work with trusted digital insurance platform providers who can help them stand at the forefront of their industry.
It is a digital world, and it will be a digital solution - after all, half of the companies on the Fortune 500 list in 2000 are no longer there – digital vision (or lack thereof) is what they all had in common.
Connor Hanan - Bio
CEO, Software Group Africa
Connor Hanan is the CEO of Africa for Software Group (SoftwareGroup.com), a global technology company specialised in digitalisation and integration solutions for financial service providers.
Connor brings over 12 years of experience with financial service providers, client-focused product design, and market analysis. Prior to joining Software Group, he held senior positions in Investor/Client Relations and Program/Project management, and served as a Director of operations with a specific focus on strategic organisational development.
Connor helped establish operations, small businesses and partnerships across 35 markets in Europe, Central Asia, the Middle East and Africa. As the CEO of Software Group Africa, he is overseeing the company’s regional operations and sales, and manages the Kenya and Ghana teams of over 90 employees.