Political volatility heightens risks worldwide..Digital trends driving insurance in Africa..The compliance of managing data integrity in the insurance industry

Political volatility heightens risks worldwide

Compiled by Insurance24

HARARE, The retreat of US leadership. Growing geopolitical competition between major powers. Decaying liberal democratic governance. The world order is turning on its side – and businesses have much to lose in the limbo.

Political violence risks are on the rise worldwide, according to Aon‘s 2018 Risk Maps for Political Risk, Terrorism, and Political Violence. One-fifth of the world’s countries are now rated as high or severe risk. At risk for businesses is the safety of their people, property, revenue generation, and supply chains.

Multinational corporations today are operating in an environment where the likelihood of interstate conflict is at its highest point since the end of the Cold War. The maps, which keep tabs on changing risks for businesses, draw on insights from The Risk Advisory Group and Continuum Economics. This year, they report that 60% of countries are exposed to civil unrest risk, 40% are threatened by terrorism and sabotage, and one-third face the serious dangers of insurrection, war, or coups.

“The Aon Terrorism & Political Violence Map 2018 points to inter-state tensions driving up longer-term political violence risks, as well as diversifying terrorist and extremist threats particularly in the West,” says Henry Wilkinson, head of intelligence and analysis at The Risk Advisory Group.

Growing polarisation in Western democracies over political, economic, and social issues, says the report, has exacerbated security and uncertainty worldwide. The resulting political violence, compounded by climate shocks and weakened fiscal positions, has increased supply chain disruption in many countries.

In Asia, the rise of China as a trade giant and viable alternative to the US has intensified political risk potential. Around the same time that Asia’s exports to the US have dropped to about 12%, Asia’s exports to China have doubled – to nearly 23%.

Regionally speaking, nowhere poses a greater risk than Africa. Ongoing conflicts and eroding governance fuelled by corruption scandals have opened doors for groups like Islamic State (IS) and Boko Haram.  Whereas throughout the rest of the world, the threat posed by IS has been contained. In 2017, the group carried out attacks in 29 countries – the same as in the previous year, indicating its influence may have peaked. However, the number of terrorist attacks in Western countries spiked to 204 in 2017 – up from 96 in 2016 – though total casualties remained about the same.

“The long-term trend of non-state actors being the predominant political violence concern in most regions is shifting towards geopolitical risks. These are more business threatening and demand board-level ownership,” says Wilkinson. “In such an unsettled environment, “it is imperative that businesses invest in world class crisis and risk management programs that are intelligence-led, anticipatory and adaptive to rapid change.”

Risk managers, especially within multinational corporations, are tasked with navigating through a complex new world order. “Given this heightened level of risk, and the rapidly evolving landscape against which businesses are operating, it is essential the companies understand their exposures and the potential for political instability to impact their people, property and supply chains,” says Mark Parker, head of property, casualty, and crisis management, Aon Global Broking Centre. “Ensuring that the right solutions are in place to mitigate and transfer risk is essential for firms operating internationally.”

Corporate Risk & Insurance

Digital trends driving insurance in Africa

By Insurance24

HARARE,  The past few months have seen digital becoming more integrated with industry sectors across Africa. But it is the data-rich environment of insurance that has especially benefitted from this with several trends emerging that impact on the effectiveness of its delivery in the continent, says Ashok Shah, Group CEO of APA Apollo.

Enter the omni-channel

One of the most significant of these is the move towards the omni-channel. But much like the paperless office, this has become one of those technology phrases that many believe will never happen. However, consumers today are naturally omni-channel. They research products online, recommend and talk about them with their friends and contacts on social networks, and purchase them either via mobile apps or at brick-and-mortar retail stores.

This integrated product approach points to the need for insurers to present customers with a range of options to engage. These can include text messages, emails, Web chats, telephones, and in-person discussions. And with artificial intelligence (machine-learning) rapidly becoming part of this environment, insurers have a variety of platforms to create a better omni-channel environment for customers.

By being able to use all these channels of communication, insurers will have a better all-round view of what the immediate customer priorities are. This will enable them to place new products in front of potential customers sooner and more directly than in the past as well as provide more bespoke offerings to existing customers.

Connecting everything

Last year, Gartner stated that there will be 8.4 billion connected things in use by the end of 2017 with total spending on endpoints and services reaching almost $2 trillion. The market for this Internet of Things (IoT) clearly illustrates the new competitive fronts and partnership opportunities for insurers.

Already, leading technology and consumer electronics providers have a head start in engaging consumers via the likes of smartphones, tables, and appliances. All is not lost for insurers. We are seeing how telemetry data in vehicles and diagnostic data in pacemakers are used by some insurance companies and healthcare providers to customise premiums based on driver behaviour and even personal health.

With IoT devices generating significant data, fast-moving insurtechs have been quick to extract meaningful insights and use them for customised solutions. The more traditionally-minded insurance providers must follow suit as user expectations require this more tailored approach.

Market opportunities

By understanding the near‐term value potential of initial data and technology investments, insurers can chart a clear and self‐funding course on their transformation journeys and become truly digital in their strategies, operations, and cultures.

With an array of innovation, the Kenyan insurance landscape has the potential for a sizable expansion of domestic market penetration. The country also presents a solid base for reaching other African markets, which in turn, will attract interest from further international investment.

Digital is charting the path for insurers in Africa. The success or failure of this will be governed by the willingness of the insurer to embrace this [digital] future

Blog SilverBridge and Apollo Investments Limited

The compliance of managing data integrity in the insurance industry

By Insurance24

HARARE, Data has become one of the most precious commodities in business today. The continually evolving digital environment means companies must adapt or risk getting left behind. For insurers, there needs to be a balance between delivering innovative solutions while meeting regulatory requirements. Angelique Strumpher, Administration Manager for Business Process Outsourcing at SilverBridge, examines this in closer detail.

The dependence of industry on data necessitated the governance and use of data, which paved the way for the development and implementation of data protection laws such as the Protection of Personal Information Act (POPIA) in South Africa and the General Data Protection Regulation (GDPR) in Europe. Even though the commencement date for the former remains uncertain, the grace period for the latter ends on 25 May this year. And while this impacts all industries, insurers will feel the pressure of compliance given how fundamental data is to their operations.

“Compliance is very much a strategic imperative for insurers in business today irrespective of whether you are a Corporate, a Brokerage or a Broker – we are all governed and impacted by the same regulatory outcomes when it comes to data compliance of our policyholders. In a digital environment being compliant is critical in ensuring channel and business success.”

The Insurance Act 18 of 2017 is designed to promote the maintenance of a fair, safe, and stable insurance market in the country. Expectations are that the Act will come into operation on 1 July 2018 but there is no confirmation of that happening yet with the deadline for comments on the draft regulation closing on 23 April 2018. The intention is to strengthen policyholder protection as well as provide for certain procurement and transformation requirements.

“This legal environment illustrates that compliance should never be considered a one-time thing. It requires insurers to continually manage the process and ensure that they tick all the necessary boxes across Systems Development, Product Development, and the Policy Management Life Cycle. Failure to do so will result in substantial fines and reputational damage. With numerous Fintechs waiting in the wings to snap up disillusioned customers, insurers must do everything they can to ensure they adhere to the regulatory framework.”

Multi-faceted approach

Becoming compliant (and maintaining it) is a complex process that requires commitment from all management levels. Fundamental to its success is to conduct an extensive audit that examines what data is being stored, accessed, and used across the organisation.

“We live in a time where customers expect insurers to know everything about them and offer them highly personalised solutions and affordable premiums. This requires an integrated data approach that is complex and has the risk of compromising personal information if governance and security processes are not in place. An internal audit aligned to POPIA and GDPR outcomes should be a priority to determine areas of improvement to ensure compliance.”

Understanding all the role players in terms of POPIA is a critical component in starting the process of classifying and categorising data. Using analysis tools and techniques developed for the unique requirements of the insurance industry becomes vital.

“Everything from data control and security to providing customers with the option to “erase” their data in the event of moving to another provider must be considered throughout the insurance data compliance process. Understanding the law when it comes to specific legislation and knowing which data is regulated are part of this [process] is a business imperative; as is data and document storage, and data and document destruction.”

Even though compliance brings with it certain universal elements and controls that must be in place, the journey of each insurer to achieve this will be different. There is no off-the-shelf solution that an organisation can install and become compliant overnight.

“Having a roadmap in place, if not already done, and maintaining the roadmap ensures that all decision-makers are on the same page when it comes to POPIA and GDPR requirements. This allows for transparency in the compliance process. Compliance knowledge becomes an Insurers’ power which could be a key differentiator in the market place in terms of reputation; which has a direct impact on business growth and business sustainability,” she concludes.