The insurance sector has seen enormous upheaval in recent years as a result of several problems, such as decreasing economic conditions exacerbated by the Covid-19 outbreak. While faced with difficult situations, we frequently see significant ingenuity when overcoming obstacles like these.
Historically, the insurance sector has been cautious, yet interacting with your insurer via chatbots or virtual assistants is nothing new. Not only did the weak economy and pandemic cause unfathomable losses, but they also steered businesses and the insurance industry toward digital innovation and growth.
According to a Deloitte assessment of the global insurance sector, the industry’s processes and capabilities improved over the last year, and personnel and technology strategies paid off. Is the industry, however, prepared for what lies ahead in 2023?
The road ahead is littered with numerous impediments, including rising inflation, interest rates, economic uncertainty, geopolitical turmoil, and increased competition from tech and non-insurance groups. According to Deloitte research, the insurance business must maintain the momentum of an ongoing culture of innovation by shifting from operational transformation to fully realizing the value that technological advancements and improvements provide.
New products and services, distribution locations, and targeting underrepresented customer niches are all examples of pandemic-inspired digital enhancements. ‘As the industry grapples with the complexities of cryptocurrency, non-fungible tokens (NFTs), and virtual activities on the metaverse, insurance coverage for emerging exposures will become an essential consideration,’ says Biniam Ghirmatsion, Executive of Wealth Management and Bancassurance at Nedbank Namibia.
He goes on to note that Namibian financial and non-financial sector regulators have both expressed concern and interest in the shifting landscape involving emerging technology. Namibia Financial Institutions Supervisory Authority (NAMFISA) will establish Fintech Square in August 2022, which is a platform where the regulator meets the innovator. Essentially, it is an innovation hub that allows innovators to safely engage in the development of the financial services business. According to NAMFISA, it is a step toward the regulatory sandbox they envision. In addition, the Bank of Namibia established a Fintech Advances Regulatory Framework to provide guidelines on how the bank would address financial technology innovations that are not currently covered by existing legislation.
‘We are also seeing the application programming interface (API) economy continue to grow,’ Ghirmatsion adds. An API is a set of rules that control how one piece of software communicates with another. APIs have proliferated in recent years as businesses strive to offer up their data and functionality to third-party developers. APIs are used by insurers to provide clients with real-time quotations, enable chatbots, and improve digital client service tools. APIs will continue to gain popularity as the need for digital integration grows. Many traditional firms are increasingly exploring the possibility of opening up their data and systems to third-party developers to build new digital experiences.
Returning to Namibia, NedNamibia Life Assurance Company Limited (NedLife) embraced new digital innovations by smoothly incorporating them into its existing operating structures. Clients can now apply for funeral policies by scanning a QR code and using the company’s’selfie’ application. Customers can also use the Nedbank Money app to obtain funeral policies while completing their regular banking. Furthermore, NedLife’s mobile sales professionals may contact consumers in more cities and communities across the country through digital means. ‘It demonstrates the extent of change in the industry and how digital innovations are breaking down traditional and physical brick walls,’ says Ghirmatsion. NedLife is enabling its client base to acquire a funeral policy via digital platforms, which addresses issues such as limited distribution points and reaching underserved markets directly.
NedLife remains optimistic about the industry although it faces tough competition. ‘To compete, we need to evolve. We must become more client-centred and focus on providing a better client experience,’ says Ghirmatsion.
According to the most recent NAMFISA annual report, despite increasing competition in the industry, it remains on a sturdy growth path.
At the release of their latest annual report on 31 December 2021, Kenneth Simataa Matomola, Chief Executive at NAMFISA, noted that the industry maintained a sound financial position, with excess assets and sound solvency levels above prudential requirements. By the end of December, 2021 long-term insurance total assets grew by 8,1% to N$66,7 billion and short-term insurance total assets increased by 10,8% to N$7,2 billion.
Ghirmatsion concludes that digital transformation is no longer a choice, but a necessity. ‘To compete in this new world, we need to embrace digital and use it to our advantage.’
