Mrs. Ojone Ocholi is a member of the fitness club at the gym of the Sheraton Hotel in the Ikeja area of Lagos. On this particular day, she was taking lessons from the gym’s ambassador and football icon, Austin ‘Jay Jay’ Okocha, when someone began selling an insurance policy to her. Ocholi was quick to dismiss the risk marketer, with the excuse that insurance in Nigeria was dead without ample technology adoption.
She said that apart from keying into compulsory insurance policies on vehicles, houses and businesses, it would be unwise for anyone to keep patronising insurance companies in the country on any other issue.
“None of them uses technology solutions to track gym visits, for example, so as to reward customers that make healthy choices and thus, reduce their outlays.”
Ocholi got support from another member of the Sheraton Hotel gym, ‘Femi Dantex, who said, “Even the insurance we do on our vehicles, how effective have they been? When you are involved in an accident, or the car is stolen, it takes the insurance company forever to ascertain if indeed the car was involved in an accident or stolen.
“Most times, you are forced to fix the car yourself or buy another car after waiting for so long for the insurance companies to respond.”
He added, “For example, with car insurance, there should be a technology that should be used to monitor driving habits and get quick assistance to the scenes of accidents. Technology is used to monitor members’ behaviour, while the careful drivers who exhibit good habits are rewarded.
“The idea should not just be about collecting data, but passing data back to members and helping them change certain behaviours. The idea should be about being told that you regularly speed on the highway and that a certain ‘insurtech’ product may help you check your speed in the future.”
The China module
The argument brought activities at the gym to a standstill, with almost everyone, except Okocha, who left to play lawn tennis beside the gym, contributing to the discourse.
According to her, focusing on technology from the United States can be problematic, adding, “We are often blinded by the bright and shiny Silicon (Valley), but often the application is limited to Africa.”
But a recent study of insurance companies by the Lagos office of McKinsey & Company suggests that the slow or none adoption of technology by insurance companies, is, indeed, intentional.
According to findings from the study, while digital technology may make some companies market leaders, it, for the most part, depletes the earnings and overall value of the insurance industry in general with consumers, not the companies, usually the winners.
Some insurance Nigerian stakeholders, like Mr. Moruf Apampa of Equity Assurance Plc, agree with the findings of McKinsey & Company and insist that the traditional insurance business model has proven to be resilient but is feeling the ‘digital effect’.
“Specifically, customers’ expectations are being transformed by digital advancements in other industries and communication channels, such as online retail, banking and social media,” Apampa states.
Based on their experiences elsewhere, the stakeholders say that customers have come to expect Simplicity – one click shopping; Convenience – 24-hour access and quick delivery; and Clarity – clear and relevant product information such as pricing, innovation and tailored services.
The Vice President, Customer Success and Strategy, ResponseTek, Chris Randall, explains “In other words, they now expect digital online delivery to be first-rate, regardless of the industry. Companies, which recognise this and move quickly to meet customers’ digital expectations are likely to be the ones that grow, while those that don’t will find it much more challenging to do business.
“Most insurance companies have generally been slow to deliver on these customer expectations, and will need to address their customers’ demands quickly. Fulfilling these demands by digitising business can have both short-term and long-term benefits.”
While banks have been quick in adopting financial technology, in the world of insurance companies, fintech has been slow on the radar, especially in Africa.
Insurers, however, are not sleeping on this threat. According to findings from a PricewaterhouseCoopers research published in 2016, around half “of insurers (globally) fear that up to 20 per cent of their business could be lost to standalone fintech companies within the next five years.”
The threat comes from lissom feet. PwC says tech start-up companies “are accessing and analysing data in new ways and in record time, not hindered by legacy technology systems as their incumbent competitors are.”
But this does not mean that the industry is at a point of weakness, says Marcia Klein, an insurance/business journalist of almost two decades with Bloomberg. “Running an insurance company requires heavy lifting: policies need large pools of capital and regulation is tight,” she adds.
Klein says that fintech companies generally do not want to be insurers but providers of services to the industry, noting that innovative technology can reduce costs, bureaucracy and help to keep customers happy.
“Insurers are waking up to the fact that they need to speed up the adoption of fintech. And they are betting big,” she adds.
Funding on the rise
According to Accenture research, investment in ‘insurtech’ grew from $800m in 2014 to over $2.6bn in 2015. A fraction of this is directed towards Africa, where there is a low take-up of insurance in many countries. But insurance coverage is growing.
A Disrupt Africa funding report showed that African tech start-ups in all sectors raised more than $129m in 2016, with the bulk going to fintech companies and the number of start-ups securing funding rose by 16.8 per cent, with South Africa, Nigeria and Kenya clinching the bulk of the deals.
Insurance brokers in Nigeria agree that South Africa has the continent’s most developed insurance market. And much of the fintech innovation in the insurance space has taken place at Discovery, a South African insurance group and an early adopter of fintech for health insurance and later in car and life insurance.
The Chief Digital Officer at Discovery, Jamie Whittaker, states that insurance is “possibly behind the curve in adopting new technology, but this is changing rapidly.”
He says the company is bolder than its competitors are. “For years, we have been pushing what technology was available to push out such as products, cut costs and save time when it comes to servicing people. Discovery uses technology to connect with members, doctors, pharmacists and hospitals,” he says in a report published by the Africa Report.
Whittaker adds, “Ten years ago, we put a number of systems in place, which would now be commoditised. But back then, they weren’t easily available – things like Customer Relationship Management systems and communication systems. We have always been at the forefront of tech adoption.”
Fintech also cuts admin costs. In the call centre, for example, insurance companies in South Africa, Egypt, Kenya and Rwanda have managed to reduce volume by 60 per cent using self-service options.
There has also been significant growth in the use of Internet and mobile claims processes, reducing the time it takes to process claims. Whittaker says, “The best interaction with a health or insurance company is no interaction. We want to remove complexity and administrative burden.”
The Nigerian example
The Managing Director, Equity Assurance Plc, Mr. Moruf Apampa, says insurance companies should have strong online presence as it is the first point of interaction that customers have with a business.
He explains, “In this mobile, on-the-go world, we are riding on technology to give customers the opportunity to insure their cars on their mobile even without Internet access or data bundle to operate.
“This game-changing service is accessible on all phone types, whether smartphones or across all the various networks, in a very fast and convenient way, with guaranteed secure payment as customer receives certificate of insurance within five minutes.”
Apampa says that electronic insurance is the new way of using technology to buy insurance conveniently on the go. He notes that with the third party auto insurance, it is easy for the user to dial the code and follow the systematic guide to buy the third party auto insurance conveniently.
The Equity Assurance boss says, “This third party auto insurance provides cover against bodily injury, death, third party property damage and the customer is guaranteed convenience that is fast and secure, as we will ensure that customers receive third party claims benefits within two days.
“The customer simply makes claims report via telephone or email, and once he validates the policy and sends acknowledgement, we receive and review claims documents/evidence and processes claims, send estimates for clients’ consent and we credit clients’ account with value of claims.”
According to him, when lives, properties and businesses are protected against risks, “the economy develops and this is why countries that have high penetration by insurance products usually show a high level of development.”
Apampa adds, “I believe that providing insurance through technology-based platform enables people to efficiently buy insurance coverage digitally without any hassles. We are making insurance accessible by meeting the insurance needs of our customers as the third party auto insurance can be bought through the phone even without Internet access from anywhere, be it in the hinterland or wherever they are.
“This is based on our strategic decision to deploy low-cost digital/mobile technologies as a means to overcoming longstanding industry challenges giving effective and affordable insurance solutions to Nigerians, regardless of their location or economic/social status.”