by KELETSO MPISANE
JOHANNESBURG, (CAJ News) – AFRICA is a global leader in creating and implementing tech-based financial solutions.
A thriving fintech sector that delivered all but one of the continent’s unicorns (startups valued at more than US$1 billion) in 2023, is an excellent example of this. Fintech provides much needed financial services to more than 350 million unbanked Africans. Insuretech – a combination of the words “insurance” and “technology” – is a shoot off of the gap-serving fintech industry that focuses on insurance.
As the name suggests, InsureTech is driven by the tools of the digital age.
Digitisation has transformed this long-standing industry thanks to a few key developments. Artificial intelligence (AI), Internet of Things (IoT) devices and cloud storage which enables large amounts of data to be stored and analysed. Leveraging technology isn’t entirely new for insurers, after all GPS devices have been used to track vehicles since the 1990s. But the accelerated pace of this digital uptake is redefining the sector in unprecedented ways.
Bringing fundamental principles of fintech – including improved value and enhanced customer experiences to the insurance industry, has yielded new opportunities and risks for insurers.
To better understand why InsureTech improves both customer experience and insurer efficiency, we need to go deeper into how technology makes insurance better.
From one-size-fits-all to personalised premiums
The South African motor insurance market was estimated at close to $4 billion in 2022 and is projected to be worth around $6 billion by 2029 according to a BlueWeave report. Most of this is thanks to a wave of digital transformation which the report says is a key growth driver.
Where premiums were previously determined by the kind of car, its age, and driver history, providers can now gather specific data on how the driver behaves. This is enabled by telematic systems that combine GPS technology with vehicle diagnostics and real-time information like the car’s speed, location, seat belt use, harsh braking or cornering, road conditions and traffic patterns. This data enables providers to better tailor premiums to individuals.
Thus, providers rely less on broad risk categories and historical data when pricing their cover. The goal is to have competitively priced products, built on granular risk groupings. We also want to keep customers engaged by making every interaction convenient – from the moment they get a quote to the minute they need to make a claim and beyond.
Centering convenience
These days most of the car buying process takes place online. A plethora of online platforms let you view new and secondhand vehicles, as well as their features and price. Buyers can book a test drive with one click while internet banking means vehicle finance applications can be submitted in minutes.
Since lenders require their customers to have comprehensive insurance before a vehicle can leave a dealership floor, getting insurance used to be a final pain point where customers had to get on long phone calls with various providers to shop for the best deal.
InsureTech has changed this picture because you can download an app, answer a few basic questions and get a quote within minutes thanks to automated onboarding.
Technology goes beyond seamless on-boarding, it defines the daily experience because you claim instantly in the event of an accident, get roadside assistance when you need it, and even get discounts and rewards for good driving behaviour. These principles, borrowed from the world of fintech ensure win-win scenarios for both driver and insurer.
Partnerships that unlock opportunities and mitigate risks
As insurers come to possess more personal information about their customers, the more important data privacy and security measures become. Aon’s South African Insurance Market Trends Report says, “there was a 205% increase in ransomware incidents in Q3 of 2023 compared to Q3 of 2022”.
It also states that new technologies like AI will require insurers to invest in “cyber resilient risk mitigation strategies” and be aware of data privacy and governance issues that could arise. Thanks to our strategic partnerships, Blink by MiWay is in a strong position to prevent these risks.
As well-established companies embrace fintech and InsureTech as a subsidiary of it, knowledge sharing between the sectors can be leveraged to mitigate risks that insurers face. One local example of this is Sanlam’s recently launched Sanlam Fintech division. The grouping has amassed a cluster of businesses, including Blink by MiWay, and provides support in crafting digital-first customer experiences.
Just as this partnership unlocks the kind of digital service that people expect, it also assists with the knowledge and resources needed to manage potential problems we encounter daily.
Blink by MiWay’s membership in this cluster amplifies our position as a leader in digital insurance and shows our commitment to innovation and transformation. It is a partnership that shows growth and willingness to adapt and brings about many advantages to customers while ensuring that we will be there for them when they need it most.
NB: Keletso Mpisane is Head of Blink at MiWay.
– CAJ News