The digital revolution promises to change the face of South Africa’s insurance market over the next few years as new entrants and established players alike use the latest technologies to deliver products that are cheaper, more convenient, and more personalised. By Bryan McLachlan, CEO at Instant Life, a life insurance company, that leverages technology extensively.
Digital channels, paired with sophisticated analytics and underwriting systems in the back-office, have already allowed companies such as Instant Life to offer high-quality insurance products at competitive prices.
Now, as technologies such as the Internet of Things, wearable computing, big data, and cloud computing mature, aggressive financial services companies will be able to deliver even more compelling and affordable products to the market.
Having become used to online banking, ordering transport through the Uber personal app, and buying from Amazon, customers want it to be as efficient and easy to deal with insurers.
Yet many traditional insurers are struggling to keep up with their customers. This context means that the market is ripe for disruption by agile, tech-driven companies that can offer greater convenience, deeper personalisation and lower costs to their customers.
Greater Convenience, more personalisation, lower costs
According to EY’s Global Customer Insurance Survey 2015, customers want more frequent, meaningful and personalised communication with their insurers. Accenture’s 2015 Consumer Pulse Survey, meanwhile, reveals that half (47%) of insurance customers want more online interactions with their insurers.
We set out several years ago with the vision of providing high-quality life insurance at an affordable cost by using sophisticated underwriting systems to price policies and the Web for direct distribution of our product to our customers. This enables us to strip a great deal of cost and complexity out of our offering, in turn allowing us to pass savings of up to 30% onto our customers and allowing them to buy life insurance in a simple 20 minute process.
But we believe that this is just the start of digital disruption in the financial services industry. The next wave of digital technologies promises to offer progressive players in the insurance market the means to offer more personalised pricing and service, build closer daily relationships with their customers, and take automation of their business processes to the next level.
Move online gathers pace
Looking to the near-future, we see the Internet of Things, wearable computing, and big data rapidly changing how insurance products are distributed and priced. In short-term insurance, many car insurers reward customers with lower premiums if they allow them to track their driving behaviour via vehicle telematics.
Instant Life is investing in fitness wearables and other technologies to bring similar options to life insurance. For example, customers who purchase Instant Life’s Fitlife product who wear a Fitbit receive premium discounts in exchange for their health data and for following a healthier lifestyle. As the technology matures, it can even provide early warning of health issues such as the danger of a heart attack.
A life policy is one policy most people don’t want to claim.
We see this as an opportunity to communicate with customers more regularly and to help them lead happier, healthier lives.
In the background, the collection of big data from wearables and Internet of Things devices, could enable insurers to price risk more accurately for each insured person. To date, the market for such technology has been niche, but it will grow rapidly as people become more comfortable with sharing their data and begin to understand the benefits of doing so.