A complex environment has led to economic pressures
Our environment is complex. Since the COVID-19 period, numerous impacts have added pressure to the economy. These impacts include increasing interest rates, Russia’s war against Ukraine causing supply chain disruptions and increasing oil and fuel prices, and from a South African perspective, the energy crisis is continuing to affect businesses and clients.
Various insurance events have also put pressure on the industry
The insurance industry has also seen various extreme events like the floods in KwaZulu-Natal and the Western Cape, increases in vehicle price inflation and vehicle theft as well as an increase in power surge claims due to loadshedding. Discovery Insure’s claims data shows power surge claims increased as much as 50% in 2022.
Our people keep the industry resilient
Despite all these challenges, the insurance industry remains strong. I attribute this strength to the people, who are the industry’s greatest asset. Our people deeply know insurance risk, and are proactive, agile and innovate relentlessly. They recognise that the cost of the complex environment cannot just be passed on to clients, therefore they always look for ways to reduce risk and the cost of claims.
Financial advisers are at the forefront of delivering insurance solutions to clients. Their value is highlighted during tough times because clients may not have enough to pay for losses out of pocket, and therefore benefit from having the appropriate insurance protection against the risks they face.
Technology has affected the industry positively
Technology has shaped the industry in many ways, and insurers are embracing technology-driven solutions. For example, using telematics devices and big data analytics, insurers can tailor products and premiums based on individual behaviour and risk. This personalised approach ensures fair pricing, and also encourages clients to manage and reduce their own risk. It also lets insurers provide tailor-made products and features for the client instead of a one-size-fits-all approach.
Artificial intelligence (AI) is also revolutionising the industry, letting insurance providers and advisers transform their operations. By automating repetitive tasks, AI frees up valuable time for providers to focus on building relationships, engaging with clients and selling more business. Providers can also use AI-driven risk assessment to tailor insurance products to meet client needs.
Industry players are key to addressing wider societal issues
We must introduce innovations to the market in a sustainable way. Insurance industry players must adopt environmental, social and governance (ESG) goals to address climate change. For instance, by setting targets to achieve net zero emissions, insurers can display their commitment to reducing carbon footprint and creating a greener future.
The country has strong governance and regulations which helps shape the industry. Industry bodies like The Insurance Institute of South Africa (IISA) are vital in advancing the industry, skills development and educating people about emerging risks.
Insurers can also bring solutions for social issues. Gaps in insurance continue to challenge South Africa. It is estimated that over two thirds of vehicles are uninsured. Insurance education and introducing affordable products can help protect more people.
Another example of a societal solution is Pothole Patrol, a shared-value initiative between Discovery Insure, Avis, the Johannesburg Roads Agency (JRA) and the City of Johannesburg. The initiative’s mandate is to fix potholes in Gauteng; and so improve everyone’s road safety. A major road hazard, potholes cost about R500 million monthly. Pothole Patrol helps address this, fixing nearly 175,000 potholes since its 2021 launch.
The future is bright and exciting
Our industry’s embrace of technology, AI integration, ESG goals and shared-value initiatives shows we are advancing while driving positive environmental and social change. I am proud to be part of a resilient industry that puts society first. The industry’s future is positive; and we will see many more exciting and creative solutions being introduced in years to come.
Article written by: Robert Attwell (Discovery Insure Chief Executive Officer)
