By James Norman, International business development director
With a young population, strong human capital and large regional insurance hubs, the potential of the African insurance sector is well known.
As the second fastest growing insurance market behind Latin America, it has a landscape all its own with established local, regional and international players. But the challenges can be unique, including food security, droughts, poverty, high unemployment, financial exclusion, high and volatile forex, corruption, and lack of infrastructure. In considering the opportunities and threats Africa faces, what is the future of insurance claims management?
A recent KPMG global insurance CEO survey cited the top five threats to the sector in 2022 will be:
- Regulatory risk
- Tax risk
- Reputational risk
- Cyber
- Emerging technologies
Transforming claims management — from infrastructure to customer interactions
The threats highlighted in the KPMG report show global issues will impact regional markets with some nuances. For example, cyber is not fully mature as a product line and disruptive technology is more likely to be a threat in Africa, whereas reputational risk is less likely to figure in the top three for the continent. Africa is well positioned to respond to the challenges, although as KPMG reported, the continent will need to join the 68% who said they will increase innovation and technology spend.
The reality is the market is at a strategic crossroads. There is a growing ecosystem of insurtechs, skills and training, better regulation, growing adaption of enterprise risk management, and governance, risk and compliance, and strong merger and acquisition interest. However, shaping the right digital road map for a claims transformation can be difficult. There is uncertainty around what a good ROI looks like for innovation, the unaddressed problem of fraudulent claims, a flat value chain that needs more convergence and how to be more dynamic, and the need to shift the dial for customer centricity.
Strategic next steps
Going beyond the traditional and expected narrative, how can we help transform the African insurance and claims sector in 2022? It starts with a shift from the dated insurance value proposition to one powered by technology with an authentic African feel. The claims process should bring together the underwriting strategy and the technology capability with human acumen and soft skills to enhance the customer experience. Ultimately, this approach will solve leakages, reduce fraud and improve claims ratios — leading to better retention and reinvestment.
To support this approach, organisations need an agile, innovative operating model that suits the right customer segment. Insurers hold a wealth of information about customers, while underwriting and claims management companies have insight into the claims landscape. That data can be used to identify habits, behaviours and trends, which can help determine ways to build better products and enhance cross-sell opportunities with existing customers. This illustrates the need to have a holistic, umbrella view of the various parts of the market. For example, using telematics in motor claims or collecting data from smart devices in health insurance.
An equally important factor to consider is the large number of financially excluded, underserved customers in traditional segments who need access, products and support. Delivering the claims process to them in a simplified way using both digital and traditional is vital. Even more so, developing different claims strategies for different segments helps organizations move to the next stage of growth. Keep in mind, what may work today in larger markets with a deeper footprint like Nigeria or Kenya may not be adaptable yet in Ethiopia or Zimbabwe.
To transform claims management and continue to build momentum in Africa will require a solid strategy with experts who understand the evolving global threats and who anticipate opportunities. To start building a more sustainable and resilient ecosystem will require strong partnerships across all the market players. Ultimately, this will change the narrative of insurance from being viewed as a necessity to being a growth industry.