Research and industry reports show trends in mobility, internet of things (IoT), big data and analytics across industries and sectors. In the insurance industry the emphasis has been the engagement of digital technologies and data analytics to improve agency experience, social media and collaboration, channel management, and automating regulatory compliance. This article looks at how insurance firms in Nigeria and Africa can deploy these tools to access larger market and improve customer experience.
Mobility
Unlike personal computer (PC) ownership and access, mobility trends in Nigeria are evident by the tele density indicators that surpass 100 percent and high mobile internet subscription rates. Hence the business of insurance needs to engage mobile technology as a channel for access to insurance for policy holders and agents and building connected collaborative communities.
How are industry players engaging with already connected policyholders and distribution agents, and again, how are they capitalising on mobile to increase access to insurance? Irrespective of segmentations and sizes so long as individuals and communities are connected, products and services can be offered in scale faster at a reduced cost because it requires very limited number of workers to man the process. This is applicable to micro insurance products on offer as well as other product categories that gain relevance of mobile market size.
Internet of Things (IoT)
IoT is the networking of physical objects or inanimate “things” embedded with electronics, software, sensors, and network connectivity, which enables these objects to collect and exchange data. Thus, inanimate objects are transmitting and receiving data. IoT applications―telematics, genomics, wearables—are increasing access to user-based and user-focused information with potential to revolutionise auto, health, life and home insurance service.
Telematics is the branch of information technology which deals with the long-distance transmission of computerised information. This enables connected cars that receive real-time information on driver habits and distance travelled, hence supporting the provision of user-based and user-focused insurance.
Genomics is the branch of molecular biology concerned with the structure, function, evolution, and mapping of genomes. Within ethical boundaries and amidst privacy concerns, access to genetic information can improve the quality of underwriting decision in health and life insurance.
Finally, in this era of wearable technologies where fashion items have been redesigned to collect and track lifestyle data from sleep patterns to health and fitness, analysis of data on prospective policyholders can present viable insight on product types, and related charges.
For the cynical, these may seem a little far-fetched, but think about this in 10 years. If you could remember the movie ‘Back to the Future II’, October 21, 2015 was the future date set 30 years ago and some of the movie predictions available today include personal drones, tablets and mobile payments, biometric devices, hands-free gaming consoles, smart clothing and wearable technology, video phones (video conferencing), waste-fuelled cars, hover boards and video glasses (Google Glass).
Google and others have already tested the driverless car that now threatens conventional automobile insurance given that the car, even though it makes mistakes, is safer than its human equivalent that does not text, fall asleep, etc. Moreover, the GPS devices on our phones collect and transmit data.
Thus, are operators’ data centres prepared to acquire such information for user-based insurance? Do they have underwriting bots for specialised pricing plans?
Big data
Even though the concept of business intelligence is not entirely new, in this era of IoT and connected devices, the number of data sources and data types are on the rise, hence the connotation big data.
There are diverse sets of information everywhere but most insurance companies are yet to assemble resources and obtain that capability through acquisition of machine learning or even basic data algorithm that helps in transforming data into valuable insights. The major issue is a lack of investment in, at least, simple machines that can learn and discern patterns and trends, not to talk of huge investment requirement for championing big data analytics. For example, IBM has a product called Watson – a cognitive computer that learns using the same cognitive framework in humans – carrying out important functions as observation, interpretation, evaluation and decision on information obtained at a particular period in time. In one of its early trials, Watson was tested against the smartest man in the game of Jeopardy. Today, IBM is applying Watson’s limitless capabilities to medicine and other areas.
Thus, how are insurance providers supporting and accessing big data analytics to improve underwriting efficiencies and risk management?
Automating regulatory compliance
The next trend is that of automating regulatory compliance. This is especially critical in climes where regulators are evolving and dynamically changing workflows. Thus, insurance operators will need agile and flexible systems that ensure seamless regulatory compliance.
Whilst majority of internal insurance automation initiatives have focused on process improvements, are the business processes end-to-end, with minimal handoffs and interactions? Are the processes and workflows agile enough to meet current and future regulatory standards?
Improving the agency experience
The experience of the distribution agencies employed comprising 54 loss adjusters, 577 brokers, 1,900 agents and employees should be crafted to ensure prompt and immediate access to insurance services.
Insurance companies need to support agency partners with access to insurance services 24/7/365 – document uploads, policy sales, etc. For now neither channels nor touch points have been deployed to support access.
Channel management
Another trend of note is the availability of multi-channel access for policyholders and distribution agents. In spite of the emergence of new digital channels, the older (legacy) channels cannot immediately be abandoned. Thus, what mix of clicks and bricks are we proposing? Which touch points are operators supporting or thinking about supporting? Are they facilitating access to insurance?
Social media
Today we live in a sharing economy (or collaborative consumption) that is supported by social media tools and applications and merging digital platforms. Alexa.com, the website rating tool, lists Facebook as the third most popular site (after the Google search sites) in Nigeria. Social media platforms are now mainstream and can enhance insurance operations, build communities, acquire collective intelligence and enhance communication and collaboration
Strategic direction of insurance companies
Planning for the digital future entails not only understanding of the digital and business trends but also internal business plans and objectives. Without access to detailed business strategies, a keyword analysis of corporate vision and mission statements summarising strategic directions revealed three key concepts: (i) Stakeholders – the various participants including agents, brokers, loss adjusters, employees, regulators, shareholders and policyholders. (ii) Value – the creation of a sound value proposition for each of the stakeholder groups represented. (iii) Technology – the application of technology in the creation of value for the stakeholders.
With this knowledge of business and digital trends and strategic direction, an appropriate digital vision for insurance operators should “drive stakeholder access and engagement to create value”.
Adopting this approach implies that forthcoming initiatives should encompass and leverage all the digital trends. While the initiatives will, of necessity, vary, they are driven to ensure strategic goals are achieved through the opportunity provided by the myriad of IT resources and existing capabilities deployed, and this is where the work lies.
Olayinka David-West
