IIG News

IIG Insights: Business Insurance Re-imagined

Daphne Peter, Head of the Education Portfolio at the IIG, welcomed all in attendance to the final edition of the IIG insights Session for 2020. This session was sponsored by Discovery Insure. A special thank you by the IIG to all our sponsors for enabling us to bring CPD accredited sessions to our members throughout the year bringing us to a total of 22 sessions for 2020. The IIG strives to bring insightful and interesting topics and encourages our members to make suggestions of future topics or themes they would like to have discussed. Our highly successful Insights Sessions would not possible without our generous sponsors as well as our IIG EduTeam and front office. Daphne reminded members to secure their CPD via the IIG CPD portal on our website. Members were also encouraged on social media engagement and to follow, like and share the IIG pages on all social media platforms using the 2020 hashtag #InsuringTomorrow.

 

Our speaker for the day was Daniel Singer, who is currently the Head of Vitality Drive for Business and business rewards at Discovery Insure. He holds a BSc Honours in actuarial science from the university of the Witwatersrand. He worked in the life insurance space briefly and then moved to short-term insurance. He has been involved in data analytics, reporting and product development. In 2014, he headed up the Product development and R&D department at Discovery Insure and since 2018, he has remained in commercial lines insurance.

 

Daniel began by taking us on a brief journey into the past where insurance policies historically focused on fire risks. In 1666, we had the great fire of London where most of the city was destroyed displacing about a hundred thousand people. This motivated Nicholas Barbon to open The Fire Office which insured homes against fire risk. Insurance has since evolved to cover Multimark business, the main classes being Property; Motor; Liability; Accident; Engineering & Marine. Unfortunately, the general perception is change has been slow in the commercial insurance industry. This slow growth can be attributed to relying on underwriters’ judgement, small transaction volumes and legacy IT issues.

 

The industry needs innovative insurance solutions to meet changing customer needs:

  • Tailored cover that evolves with the nature of the risk
  • InsureTech solutions to improve efficiency and risk management
  • Broker expertise to assist with complexity of new products

 

Some of the Macro trends that affect businesses in the 21st century are tech, social media, economic conditions, the political environment, social movement which change society’s needs and lastly demographic. Cyber risk is the no.1 risk facing businesses. Many insurers have responded with cyber cover in the following way:

  • Tailored cover for business
  • Usually includes cover for first- and third-party losses
  • May offer optional extensions for Business Interruption and Reputation Risk Management
  • May offer cyber security to proactively manage business cyber risk

 

Some examples of Insures offering comprehensive Cyber Insurance cover are Discovery, Camargue, SHA and iToo.

 

 

Some of the challenges with cyber insurance usually include the lack of historical data; the lack of risk awareness; difficulty in defining the cyber event; no geographical limitations and quite importantly, cyber insurance requires specialised expertise as it is fundamentally different from other types of insurance.

 

Covid-19 accelerated changes in the business environment where we have encountered more change in the last few months than we have over the last few decades. Over 50% of companies say most of their employees will continue to work from home (WFH) after Covid-19. As a result, we require more tailored cover for WFH businesses including extension of cover to all employee risk addresses. WFH strategies resulted in changed risks. Covid-19 resulted in challenges for some companies due to most SME’s being in a cash flow crisis. Discovery offered approximately R50K-R10 million in loans and up to R505K in premium cash back for being in good standing on their loan and premium payments.

 

The industry needs innovative insurance solutions to meet these changing customer needs for example InsureTech which is the combination of Insurance + Technology = InsureTech. Investment in InsureTech is increasing and globally it has increased from $250 million in 2011 to $2.3 billion in 2017 with 37% of InsureTechs based in Europe, the Middle East and Africa. InsureTechs play a vital role in the value chain with 63% of InsureTechs, actually enabling the insurance value chain. They use cases relevant to commercial lines insurance such as digital interaction models; telematic devices; risk and claims assessment technology, internet of things and machine learning.

 

The Burley Group, a leading UK commercial insurance broker established in 1953, improved customer satisfaction using tools via digital platforms and today they maintain a high customer retention rate through an integrated system to manage all their customer relationships.

Driving behaviour is a major contributor to motor claims as poor driving habits costs money and costs lives and increases fuel consumption by 15%. Mileage driven by business insurance clients during alert levels of lockdown were significantly reduced and premiums needed to match this reduced usage. Risk and claims assessments are now using technology over old traditional methods. Drones are now being utilised in surveys to access parts of buildings that assessors could previously not have been able to get to. Drones are now collecting advanced aerial data.

 

Machine Learning can also automate insurance processes by automating the underwriting process; data intake from many sources and therefore accurate risk assessment of the client; no redundancy and human error and enhance traditional modelling methods.

Collaboration between insurers and InsurTechs is growing as 96% of Insurers said they are looking to collaborate with InsureTechs with particular interest in software as a service approach (Saas).

 

Benefits of InsureTech  
CUSTOMER INSURER
Customer Experience Insurance expenses
Insurance cover Underwriting
Premium pricing Customer Servicing
Policy comparison Risk management
 

 

Broker expertise help businesses to choose the best cover for their needs.

Key Broker Skills required by Clients:

  • Understanding risks of today
  • Understanding client needs
  • Consultative and analytical skills

 

Digital resources enable brokers to work efficiently and those offered by Discovery business insurance are:

  • Financial Advisor Zone – an online platform allowing brokers to digitally interact with the insurer
  • Discovery Institute of Training – provides online training content for brokers
  • Product update webinars – online on the 2020 product update for Discovery Business Insurance

 

Daniel ended his presentation, thanking the IIG and invited questions. Daphne accommodated a few questions and reminded all in attendance that any further questions and enquiries can be sent directly to the IIG office.

 

Daphne then thanked Discovery as well as the speaker for the day, Daniel Singer at our last Insights Session for 2020. All members were encouraged to send topic suggestions and themes for 2021 to the IIG office.

Article by Asiyah Swaleh

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