One of the key constraints when it comes to efficient insurance distribution in Africa is low digitalization. Typically, most insurers use manual processes for onboarding, engaging, and selling insurance to customers. Additionally, the use of legacy systems can result in a significantly high cost of delivery. About 45% of insurers and 44% of brokers stated that legacy systems are a significant barrier to the growth of insurance in Africa.
With newer and simpler technology platforms being adopted, there is a huge opportunity for revamping insurance systems with digitalization. This blog will take a closer look at the digitalization opportunities for insurers in Africa, and the resulting improvements in insurance distribution.
1. Seamless Digital Distribution
About 33% of insurers across African countries like Kenya, Nigeria, and Ghana have low levels of digitization in their insurance value chain. This has impacted the insurer’s ability to expand their reach and resulted in a high cost of customer acquisition.
Employing digital distribution software that enables online buying journeys for customers, faster addition of sales and distribution channels, automations in underwriting and product assignment rules, can improve the capabilities of insurers to reach the end customer faster and reduce the overall costs.
Digital distribution software can provide intermediaries with a more seamless and straightforward experience which will, in turn, reduce the time taken to carry out manual procedures like KYC form gathering and data entry. With technology like OCR powering the modern policy administration software, the submitted KYC documents can be read and required data auto-filled wherever needed in the software. These software also provide the required support to enable intermediaries to build stronger networks, delight customers, and increase the rate of customer retention.
Furthermore, advanced digital distribution platforms provide end-to-end digitization of quote generation and policy issuance. It will also simplify the process of adding new distribution partners. For instance, these platforms can reduce the time taken to add partners from weeks to mere hours.
Insurers will also be equipped with portals, dashboards, and reports to monitor the performance of products as well as intermediaries.
2. Retaining Trust with Digital Approach
About 65% of insurers identified digital sales as an opportunity to improve the distribution of insurance. On the other hand, there is a huge gap when it comes to awareness and trust from the customer’s perspective. This can negatively impact the effectiveness of digital sales channels.
In the African market, insurance is sold and not bought. This means insurers are required to spend a large amount of time engaging in-person with customers before finally selling an insurance policy. Additionally, there is a lower level of digital capability from end customers which becomes a major deterrent with digital-only engagement.
On the bright side, this opens up a new kind of opportunity for insurers: partnering with platforms and services that prioritize retaining customer’s trust in the industry. This can significantly simplify and enhance the onboarding experience while making the sales process more efficient for distributors. Plus, it makes the process quicker and smoother for customers.
Technologies like eKYC and remote onboarding help retain customer trust during the digitisation process. Additionally, insurers should emphasize on increasing customer awareness and building trust in their companies. Insurers should also focus on strengthening their communication channels and developing a stronger, trustworthy brand image.
3. Innovation & Customer-Centricity
According to regional consumer surveys, less than 10% of the adult population in nine sub-Saharan Africa (SSA) countries have private insurance.
There are two major reasons for this: low levels of penetration and a limited range of products available. The expensive and outdated systems are inflexible, and they constrain insurers’ ability to innovate. By updating the old systems with newer, digital ones, insurers can walk into new paths of innovations. This will help them develop a wider range of products and increase insurance penetration.
It will also allow them to create innovative products that will serve as a solution to complex problems. For instance, insurers can offer embedded insurance products which is considered the future of insurance.
The pandemic has strengthened the imperative for insurers in Africa to digitalize. They face increasing pressure from customers and from regulatory bodies to shift several aspects of the business into the digital world. More broadly, they are pressured to increase productivity and lower operating costs.
Although it is challenging, the pressure to digitalize comes with a major long-term benefit – enhancement of the African insurance market. By joining hands with the right technology partner, insurers can overcome market challenges and lead the change.