Tech Marvels that will set Insurance Tone
Tech Marvels that will set Insurance Tone
The insurance industry has recorded minimal growth as far as penetration and performance go. The growth has been slower in the developing markets where penetration has seen a sluggish appetite.
The most sensible reason for this has been a lack of trust between the customers and the insurance companies for starters and a lack of adequate disposable income among the populace in many of these markets.
The last decade has, however, seen a surge in insurance trends, thanks to the advancement in technology. Industry experts say that in years to come, the growth of the industry will primarily be fuelled more by technology than by any other factor.
While the changes and growth are not expected to be instantaneous, the winds of change are already sweeping through the industry, propelled by technology and innovation. It is expected that future insurance companies will be driven by technology 100 percent and all processes are expected to be automated.
Companies that respond and adapt to this inevitable change stand to reap big while those that adopt a wait-and-see approach will cheer on the first movers.
Some technological innovations are expected to disrupt the industry and how this technology can be leveraged by insurance companies to make a meaningful impact.
Artificial intelligence (AI): AI is an umbrella term used to refer to four different classes of Artificial Intelligence namely Cognitive, Data Science, Computing, and Machine Learning.
AI is expected to play a fundamental role in helping underwriters to unlock their potential in terms of value addition to their back and front office operations.
Data science and machine learning, for instance, is expected to take center stage in implementing these processes because they are the most understood and the most used forms of AI.
The advancement in AI and machine learning is already making it possible to leverage unstructured data sets and companies are already using this development.
Companies are implementing AI in all their processes ranging from product pricing to consumer trends prediction.
They are expected to make use of the information such as credit histories and online usage trends of clients to come up with algorithms that would customize products for customers.
Blockchain and Chatbots: Blockchain technology is closely related to AI and machine learning. Insurance distribution channels, especially those directly related to micro-insurance products are expected to be modified and re-engineered to adapt to the changing and emerging trends in technology.
More and more companies have already adopted the USSD approach which is considered a low-touch approach in terms of consumer connectivity.
While it has worked very well for most firms, the jury is still out on the viability of this channel as an ideal distribution channel especially in a market where trust in the industry is still an issue to be discussed.
Peer-To-Peer: P2P insurance describes products such as rotating savings and credit associations that normally group people into pools and then offer insurance.
While this is not necessarily a new concept, we expect to see companies leveraging on technologies such as social media and taking advantage of smartphone penetration to create new group structures.
On-Demand Insurance (ODI): The current crop of consumers has varying consumer needs that insurers will have to adapt to.
For instance, the new generation of consumers would prefer to buy items several times in small quantities as opposed to bulk buying. This trend is mostly informed by the irregular income streams that intertwine with competing needs.
The solution? “Sachet marketing”. Insurers will be compelled to come up with short-term products that require periodic or regular payment either weekly, daily or monthly.
This means that insurers will sell their products on-demand and will either turn a policy on or off depending on the consumer’s needs.
As the smartphone penetration index continues to rise, we expect that more and more firms will get innovative and introduce diverse micro-insurance products for low-income consumers.
The future of insurance growth and penetration will be anchored in technology and its usefulness will depend on how well the players leverage this tool to suit their needs.
The first movers in each step of the way will be the bakers of the cake while the rest will only benefit from their generosity.
Elias Kokonya is Business Analyst, Jubilee Insurance.