Insurers in Africa are by now well aware that between 90 and 95% of adults on the continent remain uninsured and the clear opportunity that this presents to their businesses and to the advancement of financial inclusion especially in COVID-19. The trouble is that, owing to several factors, few are effectively harnessing the opportunity. Now one of the key reasons for why insurers are falling short is being painfully exposed by the COVID-19 pandemic – the lack of digitised processes and operations.
Inclusivity Solutions has already successfully launched digital insurance initiatives in Cote d’Ivoire, Rwanda and Kenya, in partnership with Orange, Airtel and Equity Bank’s Equitel respectively. Collectively a range of hospital cash and simple life products have provided protection to more than 700,000 people. The investment will be used to deepen the company’s footprint within its existing markets, support further international expansion as well as accelerate innovation in the backbone technology platform, ASPin, which underpins the three existing products.
A recent study conducted by Cenfri and FSD Africa details how the rapid move to remote working practices has challenged traditional insurance models that are still heavily reliant on paper-based processes and broker and agent distribution channels. The resultant lack of digitisation has caused a direct impact on new sales and a negative knock-on effect for the rest of the value chain. Unsurprisingly this has triggered an urgency amongst insurers to fast-track their digitisation plans. This is consistent with our own experience across the region where our digital platform has and continues to receive positive feedback from providers facing similar challenges. As momentum for this topic builds, we thought it timely to share some to the insights we have acquired along the way in helping enable our partners, which include insurers, brokers, banks and mobile operators to launch full digital enabled insurance offerings through our platform, ASPin.
- Quantifying the Elimination of Paper
It is not uncommon for us to come across established brands in the industry whose insurance products rely partially or solely on paper-based processing. A recent example is a partner of ours who still only processes payment, in the midst of COVID 19, upon presentation of a physical invoice that has been signed and stamped! In all our interactions with these organisations there is a desire to digitise but a fear of lengthy integration cycles and associated transition challenges.
Our experience in supporting our insurance partners’ evolution to digital has however shown that in reality, the process can be swift and painless especially if it is as simple as plugging into a platform that is already developed, managed and supported. On average, dependencies aside, we have been able to transition our partners to digital in less than 6 weeks, and this includes training. Moreover, these partners have seen drastic improvements to their claims processing times – in one case a claims team informed us that they were able to cut the time taken to process the claims by significantly more than half. Using our ASPin platform, claims are now routinely processed in 48 hours or less versus the standard of 30 days plus and we expect this to be further reduced as automation kicks in.
Apart from the operational efficiency that this resulted in for both our partners and the end consumer, rapid claims processing directly impacts the consumer experience and builds trust for the insurer’s brand. Furthermore, in these COVID-19 times our partners have been able to ensure business continuity with limited impact on productivity.
- Positioning for Growth
As we eluded to earlier in the blog, the insurers that we meet with are all grappling with the best way to increase their footprint either geographically or through expanded product lines. Digitisation presents them with an opportunity to provide operational consistency, efficiency and effectiveness – a helpful capability to have when expanding geographically. It also provides them with the opportunity to adapt, develop and test products quickly which offers tremendous advantage when targeting the mid-to-low income market. Products for this segment need to be simple to understand and easy to access, requiring constant iteration to ensure a frictionless customer journey.
Through digitisation our partners have been able to tap into a segment of the market that was previously inaccessible to them. Not only has this translated to an additional 330,000 policies within an18 month period for one of our partners, but it has also evoked a cultural appetite within the organisation for creating smarter, more timely, bite-sized offerings making them more disruptive and competitive in their given markets.
Indeed, there is no more salient a time for insurers to start experimenting with new product concepts that squarely meet consumers concerns around managing the risks associated with a pandemic than now.
- Digitising the Customer Relationship
A key barrier to digitisation for many insurers is how to transition consumers from a dependence on high-touch, in-person interaction to one that is purely digital. In practice, most of our partners employ a hybrid approach of both high-touch eg call centres, agents and branches or service centres and digital sales channels, with our platform being capable of supporting both. As an experienced provider and designer of digital insurance products we advocate an approach to digitisation that builds from a sound understanding of the customer. Whilst technology cannot solve all problems, a platform that is designed with a deep understanding of the customer journey will go a long way to ensuring that consumers enjoy an optimal digital experience that meets them where they are technologically, with products that they value. Our Human Centred Design research consistently reveals that consumers value a basic insurance solution that can be accessed on feature phones via USSD rather than a fancy new application, despite our desire to showcase our broader digital capabilities.
As pointed out in the Cenfri research, the pandemic is becoming a driver of disruption in the insurance industry forcing both insurance providers and consumers into a new pattern of working – a new normal, that will see digital practices become more widely used by providers and more accepted by consumers.
Whatever the reason for a insurers decision to move to digitisation, COVID-19 or otherwise, our experience indicates that insurers stand to derive tremendous benefit from the efficiencies that can be created from moving the value chain to a paper-free process, accelerating product relevance and speed to market and laying the groundwork to support the digital customer journey. Low insurance penetration in Africa points to a massive opportunity to address the mid-to-low income consumer segment and it will be the providers with the digital capabilities who are most agile and deliver a consistent and quality customer experience that will enjoy greatest success. In fact, we wouldn’t be at all surprised if a simple, cost effective and tailored product proved attractive to the currently served, high end market segment as well, as they try to cut costs and seek value during these crazy times.