Head of technical marketing at Discovery Insure
Which 2017 events had the biggest impact on the insurance industry?
It would be impossible to reflect on the past year without considering the large losses experienced in Knysna (combined losses from the fires and storms is estimated at R4 billion or $294 million) as well as the Gauteng and KwaZulu-Natal storms. This serves to remind us of the social and economic value of the insurance industry. Insurance offers
a social protection mechanism for individuals and institutions that provide peace of mind and security.
Yet the often-neglected secondary role of insurance is that it allows for economic prosperity, by limiting the financial burden that would otherwise set back individuals and businesses who experience an adverse event. By absorbing the risk of individuals and businesses, it allows them to engage in economic activities such as buying a home or expanding a business, which has a direct impact on economic growth.
However, from these events, we were also reminded of the importance of financial advice with some clients finding out that they were not adequately insured at claims stage. As insurers, we have a role to play in empowering advisers with the knowledge and tools to ensure that clients are provided with the best advice suitable for their needs.
In addition, the environment in which we operate continues to be a dynamic and challenging one. On a country level, there is low economic growth, extreme weather events, increased crime levels and a rising death toll as a result of motor accidents (up 51% from the previous year during the Easter weekend alone). On a market level, we are observing key trends in the form of changing client needs, disruption caused by technology and changes in regulation.
As a result, we believe that there is a growing social responsibility for insurers due to increased complexity and evolving client needs. We also believe that the ability to thrive in this environment requires insurers who are leaders in innovation, who are agile, who can ensure a superior customer experience, and who can turn knowledge into value.
Discovery Insure is in a unique position to meet these ever-evolving client needs and provide superior customer experience because of our culture of innovation, our investment and our focus on using technology to make insurance more accessible.
What changes and advances do you consider to be positive for the industry? As noted above, the environment in which we operate continues to be a challenging one locally and globally. Yet we are living in a time of unprecedented technological advancement, which some are referring to as the Fourth Industrial Revolution.
“We stand on the brink of a technological revolution that will fundamentally alter the way we live, work and relate to one another. In its scale, scope and complexity, the transformation will be unlike anything humankind has experienced before.” – World Economic Forum.
A lot of disruption is caused by tech companies across industries, including financial services. We believe that this disruption is positive as it allows us to create new, differentiated products and deliver superior customer service.
The result of technological advancements is that consumer expectations have changed, ultimately giving birth to the connected customer. These customers want products that are mobile-first, transparent and personalised. As insurers, we need to be responsive to these needs.
Sectors to watch out for next year?
Instead of sectors, we would rather look at trends that will influence the insurance sector more in the future; although we are launching our commercial insurance offering next year as we see opportunity in this sector.
The three trends having a big influence on the future of insurance are:
- The rise of insurtech
- New ways of providing insurance driven by technology – such as instant insurance, online insurance and peer-to-peer insurance
- Changing demographics, including millennials who are now buying assets.
In particular, we see the application of insurtech – set of innovative business models and platforms that bring in new customer experiences by applying innovative technologies in the insurance industry – being more relevant in our business model. The disruption caused by insurtech is due to the constant connectivity and huge volumes of data generated
by many telematics devices, wearables and the Internet of Things. Using this
data, insurtech has enhanced the risk assessment, pricing, service solutions and product development for many insurers that have adopted big data analytics.
Discovery Insure currently uses the vast amount of structured and unstructured data collected, including driving data – data collected at underwriting and from interactions with our clients – to price accurately, to give clients the ability to control their premiums through fuel rewards and to create new products and benefits.
We also provide seamless customer experience using technology with some of our offerings including InstantCover, whereby a client can take a picture of their latest purchase and add it into the policy; and ClaimsView, where clients can see the status of their claims in real time.
The hurdles to overcome?
We think the biggest hurdle is to innovate and remain agile in challenging times. In a challenging environment, it is easy to cut costs and stop investing for growth.
It is also easy to turn insurance into a commodity and start competing on price instead of value as insurers. Our view is that if we continue investing in technology, partnerships and creating new products and benefits that can differentiate us in the market, we will continue to grow and attract customers and advisers who believe in our value proposition.