TL;DR - Our version of "I'm not reading all that, *SparkNotes pls."
- Transforming Accessibility: Insurtech is making insurance more accessible to a wider audience by leveraging technology, offering products that are easier to understand and purchase.
- Personalised Offerings: With data-driven insights, insurtech is enabling more tailored insurance solutions, matching policies to individual needs and lifestyles.
- Efficiency and Cost Savings: Automation and digital platforms are streamlining processes, reducing operational costs, and passing those savings on to consumers.
- Enhanced Customer Experience: Digital interfaces and AI are improving customer interactions, making the insurance process quicker, smoother, and more user-friendly.
- Security and Trust: Despite the digital shift, maintaining data security and building trust with customers remains a top priority for insurtech companies.
Africa, the second-largest and second-most populated continent in the world, is one of the fastest-growing regions for possible insurance expansion.
While the effects of COVID-19 have left the African market reeling, this has led to more of a delay than a derailment of the insurance sector. In some ways, the global pandemic has helped accelerate existing trends, such as adopting digital insurance solutions.
The need for advanced technological solutions in South Africa and the rest of Africa quickly became evident. The challenges posed by lockdown restrictions forced us to progress.
So, questioning whether insurtech is revolutionising finance and insurance is like asking, “Is pineapple a tropical fruit?” (Yes, it is).
Insurtech, short for insurance technology, refers to using innovative technologies, such as AI (artificial intelligence), big data analytics, and machine learning, to improve and automate the traditional insurance industry.
The shift towards digital and remote communication channels has allowed customers and insurance providers to explore new opportunities in a traditionally restrictive landscape.
In this article, Pineapple aims to uncover the role of insurtech in this modern era of insurance.
We’ll explore expert insights, technologies driving insurtech growth, its impact and the opportunities it creates in the South African insurance industry.
What is Insurtech and How is it Shaking Up the Insurance Industry?
At its core, insurtech (short for insurance technology) aims to create accessible, efficient and customer-centric insurance solutions for the modern customer.
It involves the innovative implementation of technologies such as AI (artificial intelligence), big data analytics, wearables, blockchain, and machine learning to improve and automate the traditional insurance industry.
By streamlining processes and simultaneously personalising insurance offerings, insurtechs are entering territories traditional insurance providers have yet to conquer.
Plus, the use of tech in place of standard back-office functions helps keep company costs down.
In insurance, back-office functions are those administrative and operational tasks that support the business’s core processes.
Examples of back-office insurance include:
- In claims some text
- Evaluating the extent of damage to the car after an accident.
- Checking the validity of claims and supporting data.
- Detecting and investigating cases of fraud.
- In policy administration some text
- Processing insurance policy terminations.
- Determining insurance costs, generating invoices and handling changes to policy details.
- In data management some text
- Maintaining up-to-date and accurate client information.
- Generating reports for business decision-making.
- Storing client history and policy details.
This means massive savings potential for clients insured with these new trailblazers—a phrase popular with millennials to whom we’re shamelessly trying to appeal.
Insurtechs have automated tasks using improved underwriting systems based on data-driven insights and fraud detection to help lower their operational costs.
Insurtechs also have the honour of making faster quote generation, faster claims resolution, and customised policies the norm. You can also buy insurance online through websites and social platforms.
Insurtech Innovation Across Insurance Sectors in South Africa
Since emerging in 2010, insurtech has made waves so massive they’ve even landed on our shores.
Insurtech has driven change in these three South African industries:
“[Insurtech] empowers insurance consumers by providing ease. This is particularly the case when using the platforms (like websites, apps, etc.) that allow you to purchase insurance, manage your policy and administer your claim versus the traditional approach of doing everything on a phone call.”
“Personalised risk mitigation as a result of the predictive analysis in medicine. This can be in the form of a diet, exercise plan, or gamification of the above in order to make it more fun.”
“Insurtech companies are streamlining the [life insurance purchasing] process by offering online applications, eliminating the need for medical exams in some cases, and providing customers with instant quotes and answers to their questions via chatbots and other AI-powered tools.”
But this hasn’t been without its challenges.
Despite being Africa’s most insured country (accounting for over 70% of premiums), the South African insurance industry still faces an uphill battle. Insurance, as a product offering, has to compete in an environment plagued by high levels of poverty and startling unemployment rates, not to mention the ever-increasing cost of living.
Due to this, the call for affordable and flexible coverage grows louder with each passing day.
Thankfully, the emergence and adoption of insurtech models have enabled consumers to get what they want out of their policies.
An article by ITWeb states that “Insurtech is empowering customers with a greater level of information at their fingertips before they make a purchasing decision by enabling consumers to compare the products, services, and features of different insurers and find the one that fits just right for their unique wants and needs.”
Simply put, insurance seekers or current policyholders have greater agency regarding insurance coverage plans.
The Power Behind the Growth: Key Technologies Driving Insurtech
Behind every great tech revolution is… well, more tech revolution. Our findings showed that the key technologies driving insurtech to incredible heights include
- AI (artificial intelligence) and Machine Learning,
- IoT (Internet of Things),
- Data analytics,
- Telematics,
- and chatbots.
Insurtech companies leverage artificial intelligence to better assess a client’s risk, detect fraud, and automate routine tasks. This enables human agents to attend to more pressing issues that need closer scrutiny or a judgment call that can only be made by a person.
The Internet of Things allows the collective network of connected devices to work together to generate real-time data. This is then used to monitor risk and offer tailor-made insurance products (e.g. smartwatches, etc.).
In insurance, blockchain technology can improve trust between insurance providers and clients. It also assists in reducing transaction expenses and improving data security standards.
With data analytics, insurtechs use the vast amount of data available to gain insights into customer behaviour, spot trends, assess pricing, and refine the risk assessment process.
This is all to create an insurance product that offers everything a client would need regarding valuable benefits such as car hire or emergency roadside assistance.
Telematics is a trend that’s quickly gaining popularity in the car insurance industry.
Unlike traditional insurance models, which use rigid factors (age, location, insurance history, etc.) to calculate monthly premiums, telematics takes into account a driver’s use of their car, such as distance, driving behaviour, and more, to determine a fair premium price based on a driver’s unique risk profile.
Another trend that is growing in popularity is the use of chatbots.
In 2021 alone, AI chatbots saw an uptick of 45% year-on-year in usage. In addition to offering ‘round-the-clock service, they provide instant responses, can interact in various languages to suit a client’s needs and are adaptable.
The Insurtech Impact: Benefits and Challenges for South Africa
As we’ve already established, insurtech has created insurance products with underwriting that is so intelligent that insurance products are now more competitively priced.
Accessibility and efficiency are also areas where the implementation of insurtech processes has vastly improved. This allows previously underserved communities to also access insurance products and enjoy coverage benefits.
Faster processing times and convenient digital solutions mean consumers can change their policies or submit a claim anywhere, at any time, with just a click of a button.
However, insurtech is not without its concerns.
Questions around data privacy and job displacement have accompanied the innovative insurance shift.
While digital tools can encrypt consumer information and keep it safe from identity theft, plus the existence of the POPI Act, insurance customers are still sensitive to having their privacy protected.
Additionally, vast automation has left a struggling South African job market fearful of possible job losses.
But, these challenges also present opportunities for improvement and refinement.
For example, insurtech providers have the very achievable task of securing sensitive client information with robust security measures. And as far as job security goes, employers can also reskill and upskill existing employees to ensure no one gets left behind, skills-wise.
The Future of Insurtech in South Africa's Financial Landscape
Despite its more than a decade-long existence, insurtech industries have been a bit slow to adopt its initiatives. Rigid regulations and the uncharted nature of newer insurtech methods have hindered the pace of insurtech growth.
Additionally, one of the hurdles of insurtech is the Regulators' ability to keep up with new trends and green-light them with respect to compliance.
Still, there are many ways in which forward-thinking tech can improve a consumer’s experience.
Firstly, despite having the largest and most established insurance market in Africa, many South Africans are still uninsured. Insurtech can thus play a significant role in bridging the gap by developing affordable and accessible insurance policies.
By catering to low-income populations through digital platforms, insurtechs can go where no traditional insurance company has ever gone.
There are also ample partnership opportunities between insurtechs, banks, financiers, and retailers to reach a broader, more diverse audience of insurance buyers.
Conclusion: Embracing the Insurtech Revolution
Change is inevitable, but with the rapid development of technology, it’s happening faster than most people had anticipated. And while adapting to new ways of doing things can be jarring, it doesn’t have to be terrifying.
Especially when you do your due diligence in educating yourself on what’s to come.
Tailor-made insurance coverage, flexible policy plans and instant communication ensure a smooth customer-centric journey.
And it starts with a quick 90-second quote from Pineapple.
Pineapple can help you with insurance coverage through your preferred communication channel, website, app, or phone call.
We prioritise your comfort by making buying insurance easy. Get a quote for comprehensive car insurance in seconds, and activate your cover in minutes!
Please Note: The information provided above is for informational purposes only; you should not construe any such information as legal or financial advice.
Pineapple (FSP 48650) is underwritten by Old Mutual Alternative Risk Transfer Insure Limited, a licensed Non-Life Insurer and authorised FSP. T&Cs apply.
Team Pineapple
Team Pineapple comprises our company’s top talents, who are dedicated to creating clear, high-quality content on essential vehicle insurance topics. This diverse group, including actuaries, accountants, data scientists, and insurance professionals across South Africa, collaborates to produce enlightening and empowering articles.
Each piece is thoroughly researched, factually accurate, and rigorously reviewed to ensure quality.
*We say they’re the finest because we want them to keep writing for us!
