The Impact of Technology on the Insurance Industry
The short-term insurance industry is undergoing fundamental change which is primarily driven by information technology. Not too long ago, customers bought all their insurance cover during face-to-face meetings from advisers through paper-based systems. Today, consumers research products online and the next generation of insurance buyers will be buying more products online, including insurance.
Smart Phone Penetration
There are now more cell phones than people in South Africa and while smart phone penetration is currently at around 34%, it is increasing at a rate of 20% per year. While the vast majority of South African desktop internet users have smart phones, over 80% use their mobile devices to access the internet.
Considering how young the SA population is, 41% of 18-34 year olds own a smart phone which means that the next generation of home and car buyers, known as the millennials, will need short term insurance products as well. This demographic group is independent, entrepreneurial and socially conscious; they won’t want to meet with insurance agents to discuss complex insurance products. Insurers will need to adapt to capture this market.
A Paperless, Multi-Channel Experience
Many insurance companies have started implementing paperless systems to appeal to the technologically savvy market and to increase operational efficiency across various channels.
Cloud computing is another area that offers a seamless solution for operational flexibility, cost savings and scalability as well as enabling delivery of faster claims, policy and billing services. Insurers can offer an improved and efficient service with more customer interaction at multiple touch points by automating and digitising their core systems.
Analysing business, customer and geographic data can improve the customer experience and assist insurance companies to understand their customers better and to process claims more efficiently.
Customers expect to engage with insurers across multiple channels and if this mind-set is applied to developing new products, it will pave the way towards interactive and responsive engagement with consumers, suppliers and staff. As an example, telematics devices can now be installed in vehicles to monitor the time you spend driving around, fuel usage, driving safety and much more. By combining this information with location, speed and time information, a company can accurately assess each driver’s individual risk profile which could result in lower premiums and more tailored insurance solutions.
Cyber-crime is a real threat in today’s world; companies need to ensure that the necessary risk management practices and software are in place to protect their customer data. Companies are required by regulation such as the Customer Protection Act (CPA) and the Protection of Personal Information (POPI) to safeguard the privacy and information of customers, brokers and staff, and as such insurers will need to strengthen regulation compliance.
A final word
Insurers who are nimble and can offer shorter turn-around times will benefit as they will be ready to capture the millennial market. Getting this right will determine which short-term insurers will build sustainability into their future.