Digitisation: Six Key Trends Disrupting the Insurance Sector

LAGOS (Capital Markets in Africa) – As exponential, digital-driven technologies transform the 4th Industrial Revolution from a buzzword into reality, the financial services sector – and insurance in particular – face massive disruption, it starts with a radical reimagining of the very model insurance has been built on since its origins in the 14th Century, and Africa is no exception.

Several trends are emerging on the continent that pose a significant threat to the business models of established insurance companies, but also offer enormous opportunities to those astute and nimble enough to seize them – incumbents and newcomers alike. These trends exist in the realms of digitisation, but more importantly, in digitalisation.

Digitisation is about optimisation, taking existing business and operating models and applying digital technologies to make them work more smoothly and efficiently. In the admin-heavy insurance sector this typically involves automating many aspects of the assessment and claims processes as well as risk profiles and actuarial models.

Digitalisation, by contrast, as Gartner defines it; is an entirely new way of doing business. It’s about opening up new markets, acquiring new customers, offering new products and moving into new industries. Essentially, very little of your current business model remains in world in which you embark on a digitalisation journey.

Trend 1: From insuring things to enabling and protecting a better life 
Traditionally, the insurance business has been about covering objects against risks, whether these be jewellery, vehicles, homes, lives or health. Yes, insurance companies in their marketing may have paid lip service to the customer, but in reality, their business model has centred on the items being insured.

Digitalisation is upending this paradigm, putting the customer at the centre of an industry that’s increasingly less about things and more about risk and improvement services to enable and protect a better life.

Interestingly, it’s technology in the hands of customers that’s been helping to fuel this trend and South Africa is no laggard in this respect. The recent evolution in health insurance from bolt-on loyalty programmes to complex, behaviour driven ecosystems – are paving the way for a model where insurers allow customers to lower their risk profiles, and reward them for desired behaviour in real-time.

An extract from the INTO AFRICA April 2019 Edition: Envision Africa’s Digital Revolution.  The article is written by Heidi Custers (Digital Transformation Strategy Lead, Deloitte Consulting South Africa) and to read the full article, please download by clicking: INTO AFRICA PUBLICATION: APRIL 2019 EDITION.