Improving Insurance Penetration In Africa Using DX

Insurance has been existent in Africa for over a century, but its penetration within the continent has much room for improvement. Digital Transformation, on the other hand, only became a huge topic in the globe after the onset of the pandemic.

Digital Transformation has been fast tracked by the pandemic and multiple industries are looking at technology to improve processes and better serve the customer. These industries have seen massive improvement in customer satisfaction, but the insurance sector is still experiencing gradual improvement.

The CEO’s Breakfast at the Africa Insuretech Forum saw a discussion on what needs to be done within the insurance industry to improve penetration. Various Insurance Companies’ CEOs from around the continent agreed that trust is one of the biggest obstacles to the growth of insurance penetration in Africa.

For years, the insurance industry has been trying to improve its penetration in Africa, by face to face insurance agents and insurance brokers. There hasn’t been a lot of results from this as most Africans shy away from insurance products.

Gwen Kinisu, the CEO of Prudential Insurance (which has been in the industry for a century), thinks that the biggest issue is that insurance customers do not trust that they can get value from the insurance products that they are being offered.

“The insurance industry beeds to come together to improve trust in Africa and insurance companies need to pay claims to improve the trust,” Gwen noted adding that data is also critical in helping insurance companies in Africa build trust.

“We need to utilize data to help us gain the trust in the market because there’s a lot that can be done with data analytics which most insurance companies are not,” she said, “We also need to allow data sharing among industries and come up with products that will address Africans’ needs.”

Most CEOs in attendance at the breakfast event agreed on improving the trust and that digital transformation needs to come in to improve.

Franco Stols, the Business Development Manager at Altron, suggested that digital transformation is very important in the insurance sector because the customer has also changed.

“Today and in the future, we are selling insurance to the Gen Zs and Millenials and these are people who are always on their phones. They will need solutions that speaks to them and this will increase the penetration. We are implementing this in South Africa and the penetration is at global level,” Franco noted.

He further noted that South Africa has incorporated digital transformation in insurance and it now ranks third in the world in insurance penetration. The United States leads the way with Italy coming second in insurance penetration.

These countries have digitized insurance and are also selling risk-based insurance. In most African countries, people will buy insurance because the government has made it mandatory for them to have. This is mostly the case with motor vehicle insurance.

With the case of motor vehicle insurance, for instance, it has been raised that as people pay for the insurance, the products are not really risk based. Digital transformation needs to play a role in ensuring the customers are profiled as per the risk they are exposed to.

Altron’s Franco Stols talked about how telematics has helped make motor vehicle insurance risk based because it collects data that helps study a driver’s habit. The insurance is valued as per the risk the driver is facing based on his driving patterns and habit.

The panelists at the CEO’s breakfast at the Africa Insuretech Forum, agreed that digital transformation is needed to improve the insurance industry. Most importantly, the insurance companies need to also work together with insuretechs to make sure that they offer products that the customers actually need.

The panel moderated by Ali Hussein had four panellists including Franco Stols, Githanji Waiguru, Prassana Miapuram, and Gwen Kinisu.