COVID-19 has reinforced the need to adopt technology to make life insurance purchase and uptake simpler as more consumers embrace a tech-driven shift.
CIC Life Assurance Limited Managing Director Mr. Meshack Miyogo said that the insurance industry is critical for effective risk mitigation and it is therefore vital that the industry evolves with the times.
“To stay relevant, insurance companies need to accelerate their digital transformation journeys by looking at the whole life-product purchasing process. Developed economies are already using emerging technology with insurance firms utilizing tech to support real-time underwriting and claims pricing. This means that it is only a matter of time before emerging economies extensively adapt and utilize technology to drive insurance uptake. As such, insurance companies in emerging markets need to start investing in and building capacity for this,” said the CIC Life Assurance MD.
With the uncertainty around COVID-19, the insurance industry is expected to grow as more people embrace life protection against unforeseen circumstances. In addition, as the middle-income segment expands, there will be increased demand for policies that shield against risks and support wealth management. Life insurance is well-positioned to serve a ballooning market and its future will be driven by digital transformation, personalized policies, and partnerships.
The CIC Life Assurance MD added that there is a need for the adoption of innovative tools utilizing emerging technologies. “The use of AI and Big data is increasingly becoming a major factor for growth in the insurance industry. The use of data enables insurance providers to create customized products and solutions that are practical and relevant for the consumer. Consumers are now demanding for personalized experiences and the adoption of technology is a catalyst for meeting their demands,’’ said Mr. Miyogo.
As consumer behavior shifts towards online channels, developing digital insurance platforms that onboard and allow users to manage policies online will be a key determinant of consumer choice going forward. This can be done through partnerships with InsurTechs or by building digital capabilities within the organization.
Digital platforms will allow for real-time interaction with clients, enabling insurers to meet client needs and concerns in an apt manner. Further, strong digital systems will reduce operational costs for insurance firms, reducing the amount of paperwork, physical offices, and human capital resources spent on face-to-face interactions. Leveraging technology will also expand insurance firms’ reach, with digital tools allowing them to interact with clients from different geographical areas and time zones.
The future is digital and as the industry works towards deepening life insurance penetration rates, the utilization of digital tools and partnerships will be instrumental.
The Association of Kenya Insurers 2019 annual report highlighted that insurance penetration was at 2.37% with an average growth rate of 8.27% since 2015. The report also showed that non-life insurance penetration was at 1.37% while that of life insurance was at 1.00%, possibly because of the misconception that people buy a life cover primarily in case of death.
However, it is now gradually becoming a vital tool for wealth management for middle and high-net-worth individuals. People are now beginning to recognize that there is a wide range of life insurance options for individuals as well as groups. And with the growing interest in the market, insurance firms have an opportunity to utilize digital platforms to educate consumers about life insurance as a form of financial planning.