Time for African insurance industry to digitalise
Noah Kupeta
ZimSelector.Com Business Development Director Zelina Francis explaining the significance of digitalising insurance in Africa.
HARARE, Improved information communication technologies are a critical component African insurance companies should consider in contemporary times to improve the interface between and among themselves and their clients.
Digitalisation of insurance products should be a priority to the insurers’ minds, regardless of the unrelenting regulatory changes and small economies of scale which are still making it difficult for insurers to focus on organic growth of the industry.
Demographic changes and customer behavioural changes, together with rapid urbanisation bring new opportunities which should drive insurers to compete for policy holders, various stakeholders’ attention and share of wallet.
It must be very clear to insurers that if they are to survive in a digitalised business community, they need to focus on new ways of doing business with the “new customers” and compete with the “new entrants” in their territory.
In view of the fast changing technology, there is need for research and development of new legislative and regulatory instruments to secure Africa’s cyber space to digitalise the insurance and pension industry.
In his state of the nation address during the official opening of the 2019 second session of the ninth parliament, Zimbabwean President, Emmerson Mnangagwa called for electronic business operations to improve the ease of doing business.
“This Session of Parliament must therefore consider the Cyber Crime and Cyber Security Bill; and the Data Protection and Electronic Transactions Bill to regulate this field.
“The law must be a universal instrument of development.
“Our Vision 2030 envisages a Zimbabwe with a digital and knowledge driven economy.
“As such, we shall reinvigorate the implementation of the e-Government programme, as well as operationalize the National Data Centre, to foster digital capabilities across the entire economy”, said President Mnangagwa.
But, the question remains, in what ways can the insurance industry start to seriously consider digitalising their business model? What are some of the benefits of going digital?
ZimSelector. Com, Zimbabwe’s first ever digital Financial Services Aggregator, Business Development Director, Zelina Francis recently encouraged insurance companies to exploit the internet.
She said customer behavioral change, traits and demographics have changed and African insurance companies should seriously self-introspect.
“Insurers must respond quickly to meet their changing needs in order to achieve real industry growth
“The demographics of the Zimbabwean (and African) population and their changing behaviors in a world dominated by connected devices, the internet, and social media, all combine to make access easier and increase penetration levels.
“Re-assess your value chains and exploit your data – it’s priceless
“Optimise your legacy processes for digital
“Digitize your documents – eliminate paper based processes,” she said.
Zimselector.Com is a digital insurance company that is currently innovative in terms of promoting a digital African insurance industry.
Analysts said it is high time relevant government authorities’ work in harmony with organisations such as Zimselector.Com to revamp the whole insurance sector to compete with other digital insurance companies such as Lemonade an international Insuretech Startup digital platform and Zimbabwe’s Ecosure.
In 2018, at its second full year offering renters and homeowners insurance, Lemonade took in $57 million in premium revenue from 425,000 customers, 75% of them under 35 and 90% of them buying such insurance for the first time.
Currently, Lemonade is operating in 22 countries. It is expecting to double revenue this year and expand to over 50 countries around and beyond Europe securing 25% of Zimbabwe’s total GWP for Short term insurance in 2018 $227million.
This, analysts said has the potential of bringing revenue and expanding Zimbabwe’s gross product in many ways.
However, Postal and Telecommunications Regulatory Authority of Zimbabwe (POTRAZ) has indicated that internet use in Zimbabwe is declining.
Information gleaned by this publication from POTRAZ website reflecting on its annual report on the first quarter of 2019 revealed that the number of internet bundles users has deteriorated sharply in the most recent months.
POTRAZ Director –General, Gift Machengete, attributed the decrease in the use of the internet to the deteriorating economy.
“The 1:1 percent (91 000) decline in total active data and internet subscriptions is attributable to the depressed demand in the economy.
“What this means is that, it could actually be a function of affordability where now a lot of people prefer to use Wi-Fi,” he said.
Zelina concurs explaining that the cost of data, internet and infrastructure are among a host of factors that affect African insurance companies to embrace digitalization.
‘’Despite having close to 16% of the global population, the current insurance penetration in Africa is about 3.5%.
‘’South Africa leads with 17%, while others lag.
‘’Zimbabwe has a penetration of just over 4%, Kenya has 2.9% and in fact, leads East Africa with this low statistic.
“It is followed by Rwanda at 1.7% and Tanzania at 0.7%,” she said.
Mkhulili Ndhlovu, Managing Director at Capesso, a vibrant digital company offering a wide variety of risk solutions which includes capital adequacy planning, treasury services, credit risk and IFRS encouraged African insurance companies to seriously make use of the internet.
“The world has changed some of the major changes include regional integration initiatives, disruption by Fintechs and non-traditional insurance players (e.g. telecom giants) the market will continue becoming very competitive going forward.
“Insurance players need to invest in digital transformation, instead of a big bang approach start small based on product development approach with for example, process automation followed by digital touch points for customer on boarding or customer service amongst others. That way they can start getting a return on investment from these smaller initiatives,” said Ndlovu.
Digital insurance as Ndlovu explains, plays a critical role in as far as bringing transparency and accountability is concerned in the insurance sector regardless of the major challenge of funding as well as the cost of data.
“Our role is to bring order to data chaos. With the onslaught of new regulations, insurers are finding it increasingly important to bring order, transparency, and control to their data.
“Information technology solutions helps Chief information, risk and financial officers drive business results to even greater levels with unprecedented performance, responsiveness, scalability and manageability.
“We also help insurers come into the digital age by providing them enterprise resource planning solution and omnichannel solutions allowing them to streamline their businesses as well as offer their customers multiple touch points for service delivery;” he said.
Quizzed on the literacy levels and use of the internet in the insurance sector, Ndlovu said “generally the response has been great customers are familiar with the new modern technologies driving the insurance industry so they are very keen to embrace the products we offer”.
Life Offices Association of Zimbabwe secretary general Mr Mavukeni Rufai said there is a lot of investment that must be done within the insurance industry.
“There is a lot of investment that must done, technology requires a lot of investment.
“If you look at our currency in the past, it has derailed some of these plans but we are doing our best we can.
“What we are trying to do is to give our clients the best, the removal of paper from your system implies that you also improve your service delivery and that’s the main issue.
Technology is key to African insurance success particularly fighting against corruption and other business malpractices.
