Insurance companies should adapt their traditional business models to be more responsive to their client base, the Deloitte Africa Insurance Outlook showed on Thursday, pointing to digitisation as one of the key instruments that insurers can use to draw in more clients.
The use of digital channels to provide or access services has gained traction since the start of the Covid-19 pandemic, though this was off a low base.
Many insurers in Africa are still in the early adoption stage of digital transformation and have only recently started to focus on customer centricity, the report reads.
Customers already demand greater digitisation and process automation, flexibility in product offerings and terms, and individualisation of risk profiling and pricing.
“While there are clear leaders in the industry, there is still time to invest in beyond-the-obvious customer initiatives and partnerships to enable all insurers to move from a product-push mentality to individualised customer offerings in a streamlined and deliberate fashion,” said Amilah Costandius, non-banking financial services lead consultant at Deloitte Africa.
Digitisation can play a key role in meeting customer expectations about the automation of processes, from application to claims stage, flexibility of product offerings and tailor-made risk profiling and therefore pricing.
Naked Insurance, launched in 2018, has fully automated the quoting and transacting processes via a mobile app that uses artificial intelligence-based algorithms. Customers have access from anywhere and can purchase insurance in less than two minutes, with no agent intervention or paperwork. Insurers are also able to cut the cost of premiums due to automation-related savings.
The publication also highlighted the effect of the introduction of International Financial Reporting Standard (IFRS) 17 on the tax base of long-term insurers in SA. IFRS 17 will replace IFRS 4 as the financial reporting standard for insurance companies and will be implemented for reporting periods starting on or after January 1 2023.
Deloitte expects that, for some, the transition to IFRS 17 will cause significant additional IFRS profits. These increased profits will result in increased tax payable on transition that may place certain insurers under severe liquidity strain.
Other key aspects of the 2022 insurance outlook focuses on the 2021 SA Financial Action Task Force’s (FATF) Mutual Evaluation Report for SA that shows the country should significantly improve its practices and processes regarding countering money laundering and terrorist financing.
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