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IIG Insights: The Future of Insurance in a Post Covid-19 World

The session was hosted by Darryl Grater, President of the IIG who is also as an Executive at Discovery Insure and webinar sponsor welcomed the guest speaker.

The context of the webinar is that the world is experiencing an exceptional situation. Over the past few months, the way we run our businesses and serve our clients has completely changed. The economic slowdown has had a direct impact on the insurance industry from a growth, retention and investment perspective. Besides all the necessary short-term measures, insurers also need to think beyond the current crisis to a future that may be very different. Discovery believes that this crisis offers an opportunity for innovation and that there are key trends across both personal and commercial lines that will affect the future of insurance in a post-COVID-19 world. This session covered what these trends are and how insurers can remain competitive by taking advantage of some of these trends.

Precious Nduli is currently an Executive at Discovery Insure with responsibilities for Technical Marketing and Vitality Drive Engagement. Her background spans strategy, marketing, business and product development in the short term and long-term insurance industries. Precious is also an IIG Council Member and heads up the Marketing Portfolio.

Precious welcomed everyone and thanked IIG for this opportunity as she gets to flex the two hats currently being worn namely, IIG council member and Executive at Discovery Insure.

Trends are not new but have been accelerated by Covid.  This has had a big impact on South Africa, with some of the changes to lives being:

  • Work from home (WFH),
  • Online learning,
  • Social distancing & physical restrictions
  • Inability to travel.

The South African Government reacted very rapidly preventing a double death rate with the implementation of the hard lockdown levels earlier this year.  Now, the economy is slowly moving into recovery mode. Some of the impacted businesses are short term insurance companies who often ask why do trends matter. Innovation in this current climate of recovery will be key to having a competitive advantage. At Discovery, what is termed as “mega-trends”, are trends that permeate industries and markets. We need to have a deeper understanding of the nature of risk, the social responsibility to manage it and the technology required to mitigate it.  Even Elon Musk recognised the need for revolutionary actuaries who have a deep understanding of risk and how to manage them.  We see a rise of digital and telematics used by short term Insurers.

Some of the challenges on short term insurance are:

  • Pressure on growth and in-force book
  • Consumers are expected to remain under pressure
  • The changing behaviour of customers places pressure on the bottom line

The potential new and existing customer has reduced affordability and is looking to reduce costs which inevitably is a risk to insurers. The role of brokers has come under a spotlight and has become quite crucial and important as customers seek value & advice.

Financial security has become a customers’ top priority. Key Focus:

  • Operational efficiencies,
  • Creating price differentiation and profitability,
  • Increasing relevance of usage-based insurance (UBI),
  • Business insurance re-imagined

Weaknesses of traditional business models have been revealed. The biggest challenge being, building relationships remotely. Business models were not agile enough to respond quickly enough and had little spend on tech and digital investment. Insurers must embrace technology in order to be resilient and successful. The world’s top three digitally successful insurers being Junigo, Getsafe and Zhongan.

The environment must be open to digital expectations and capabilities. According to stats recorded, there is approximately 60% digital penetration in South Africa, which converts to about 36,5 million internet users. These digital users then expect similar services from insurers as with their retail purchases. We see an increase in digital onboarding, robo-advisors, facial recognition, chatbots & even whatsapp to engage with customers.

The ability to automate the underwriting will eliminate redundancy and human error. Product development and personalised products are being sought with an intention to improve operational efficiency in claims. How do we enable brokers and get them aligned within a digital perspective? By providing access to platforms that enable AI quotes, digital consent forms, financial advisor zones which can offer more products & services. In order to protect employees whilst ensuring the highest quality of service, companies must invest in scale, e.g. equipment & connectivity, collaboration tools and support.

Covid has prompted an environment whereby creating excellence in pricing to attract and retain customers has become non-negotiable. There are about 45 players in the field, and one can’t just drop prices as sustainability is equally important. Pricing is a data exercise,  with better access to and the ability to analyse large amounts of data, leads to enhanced ability to price. This data can then be used for online marketing, each new client becomes a new data point. Analytical skills are required to analyse data and these sources must be updated annually. Results of big data means 30% better access to insurance services. Machine learning and AI enhances the quality of data.

Some of the advantages of increased pricing sophistication are reduction in bias and error, accuracy, increase tasks and scope, reduce time to market.  One can generate lead forces from profitable clients. Pay as you drive has become much more relevant during Covid as less vehicles have been on the road. There has been a significant increase in customer demand for UBI from 35% to 51% in a year as almost everyone seeks telematics.

 

Customer benefits:

  • hyper personalisation,
  • control premium,
  • access to safety features

Insurer benefits:

  • risk differentiated pricing,
  • access to additional data,
  • increased savings & profits
  • Mileage shift based on Covid

Business insurance has been reimagined as 31% of South African companies had more than 60% of their staff working from home (WFH). WFH may become a feature that remains in post-Covid world.

Protection of business possessions now needs to extend to employee’s risk addresses as the increase in cyber risk has been tenfold. Cyber insurance has become even more relevant and staff must be educated and trained in this regard. Companies need to implement additional security measures in a WFH environment.

Daphne Peter, head of the Education Portfolio and IIG Council Member ended the session with a closing statement and thereafter accommodated a few questions. A prominent theme was usage-based insurance and knowledge sharing in the insurance industry especially with regards to cyber risks.  Daphne thanked Precious for her highly informative presentation as well as the sponsor, Discovery and all attendees.

By: Asiya Swaleh

 

 

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