Insurers must adopt technology to steer expansion drive
JOHANNESBURG, (CAJ News) – THE continent’s market leader in enterprise application software has advised local insurers to embrace modern technology to enhance their expansion into Africa.
South African companies, hungry for success amid the economic slowdown, are casting their eyes on opportunities in other African markets.
Neo Mathe, SAP Africa’s Value Engineer (Insurance), said in the highly competitive and disruptive market environment most business that operated in and relied on outdated technology to serve the needs of tomorrow’s customers severely limited the opportunities for success.
“By taking advantage of the best modern technology has to offer, insurance companies can continue to deliver great value and retain and acquire customers effectively and efficiently – no matter where they are doing business,” Mathe said.
Mathe said despite innovation by some insurers in East and West Africa, most insurers are still struggling with outdated core operations systems.
“In fact, insurance in these regions is to a large extent still paper-based, which only adds to the complexity of doing business and creates frustration among customers as delivery of key services is held back by slow, inefficient internal systems.”
Mathe said in the short term, insurers who adopt a modern technology platform would free up precious resources that allow them to focus on their core business, in the process creating new and easier ways for customers to do business with them.
A modern system, the expert said, brought efficiency that reduced some of the insurer’s operating expenses while simultaneously creating new revenue streams.
“In the long term, access to tools and solutions that enables change within insurance companies can catapult an insurer ahead of the curve of innovation, increasing the speed to market of new products and solutions and handing them a critical competitive advantage.”
The official’s sentiments come on the heels of statistics released by the African Development Bank, gross domestic product indicating growth was predicted to reach 6,1 percent in West Africa and 6,7 percent in East Africa by 2016, compared to a very modest 1,7 percent growth predicted by South African Finance Minister, Nhlanhla Nene in his mid-term budget policy statement.
Mathe said when insurers expanded to new regions, they automatically faced regulatory risks as reporting requirements differ from one country to the next. Failing to meet regulatory requirements can lead to debilitating financial penalties and even, in severe cases, the suspension of an insurer’s trading licence.
“However, biggest cost to not meeting regulatory demands lies in the damage to the insurer’s brand, as customer trust is eroded through the imposition of fines and suspensions. Without the ability to retain customers or attract new ones, insurers enter a freefall into obsolescence.”
– CAJ News
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