Guest Contributor | Feb 21, 2024 | 0
Insurance industry embraces digital innovation
Over the past few years, the insurance industry has experienced tremendous change as various challenges erupted, such as declining economic conditions worsened by the Covid-19 pandemic. As is the case with facing difficult circumstances, we usually witness considerable innovation when overcoming hurdles like these.
Traditionally, the insurance industry has been conservative, but lately, it is nothing new to engage with your insurer through chatbots or virtual assistants. Not only did the poor economy and the pandemic bring about incomprehensible losses, but they also placed businesses and the insurance industry on a path of digital innovation and growth.
A report by Deloitte reviewing the global insurance industry, states that the industry’s systems and capabilities improved during the past year, while talent and technology strategies paid off. But is the industry ready for what lies ahead in 2023?
The road ahead is scattered with multiple hindrances like rising inflation, interest rates, economic uncertainties, geopolitical upheaval, and increasing competition from techs and non-insurance entities. The Deloitte report advises that the insurance industry must continue building on the momentum of an ongoing culture of innovation, shifting from operational transformation to fully realising the value that technological developments and upgrades bring.
Pandemic-spurred digital enhancements include new products and services, distribution points, and seeking out underserved consumer niches. ‘Insurance coverage for emerging exposures will become an essential consideration as the industry grabbles with the complexities of cryptocurrency, non-fungible tokens (NFTs), and virtual activities on the metaverse,’ says Biniam Ghirmatsion, Executive of Wealth Management and Bancassurance at Nedbank Namibia.
He continues by saying that both the Namibian financial and non-financial sector regulators have shown their consideration and interest in the changing landscape involving innovative technologies. In August 2022, Namibia Financial Institutions Supervisory Authority (NAMFISA) launched Fintech Square, which is a platform where the regulator meets the innovator. Essentially, it is an innovation hub that allows innovators to participate safely in the transformation of the financial services industry. According to NAMFISA, it is a move towards their envisaged regulatory sandbox. Bank of Namibia also issued a Fintech Innovations Regulatory Framework to guide how the bank would treat financial technology innovations that are not already subject to existing legislation.
‘We are also seeing the continued rise of the application programming interface (API) economy,’ comments Ghirmatsion. An API is a set of rules that govern how one piece of software interacts with another. In recent years, there has been an explosion of APIs as companies seek to open their data and functionality to third-party developers. Examples of how insurers use APIs include providing clients with real-time quotes, powering chatbots, and enhancing digital client service tools. The growth in APIs will continue in popularity as the need for digital integration increases. Many traditional businesses are now looking to open their data and systems to third-party developers to create new digital experiences.
Returning to Namibia, NedNamibia Life Assurance Company Limited (NedLife) embraced new digital advancements by seamlessly integrating the technology with its current operational structures. Its clients can now apply for funeral policies by scanning a QR code and using its ‘selfie’ application to take out funeral policies. Clients can also use the Nedbank Money app to access funeral policies while doing their usual banking on the app. Furthermore, NedLife enables its mobile sales agents through digital means to reach customers in more towns and communities around the country. ‘It demonstrates the extent of change in the industry and how digital innovations are breaking down traditional and physical brick walls,’ says Ghirmatsion. NedLife is enabling its client base to acquire a funeral policy via digital platforms, which addresses issues such as limited distribution points and reaching underserved markets directly.
NedLife remains optimistic about the industry although it faces tough competition. ‘To compete, we need to evolve. We must become more client-centred and focus on providing a better client experience,’ says Ghirmatsion.
According to the most recent NAMFISA annual report, despite increasing competition in the industry, it remains on a sturdy growth path.
At the release of their latest annual report on 31 December 2021, Kenneth Simataa Matomola, Chief Executive at NAMFISA, noted that the industry maintained a sound financial position, with excess assets and sound solvency levels above prudential requirements. By the end of December, 2021 long-term insurance total assets grew by 8,1% to N$66,7 billion and short-term insurance total assets increased by 10,8% to N$7,2 billion.
Ghirmatsion concludes that digital transformation is no longer a choice, but a necessity. ‘To compete in this new world, we need to embrace digital and use it to our advantage.’