How adoption of technology can give much-needed boost to insurance

Innovation stands out as the only viable option
Innovation stands out as the only viable option for the insurance sector to stay relevant in an ever-evolving consumer market. PHOTO | SHUTTERSTOCK  

The market’s current mood of uncertainty and powerful, disruptive, global forces of change could inspire a wide range of responses, from reticence to optimism.

That is why the future of insurance is exciting and optimistic as practitioners delve into current and future trends and technologies. In times like these, insurance is an essential tool to help Kenyans future-proof their businesses, homes, lives, health and assets.

With Kenya’s remarkable pivot towards innovation and technology over the last 15 years, adapting to changing technological advances in the current global scenario is inevitable and has become imperative for insurance companies to keep up.

The 23rd Annual Global CEO Survey recently launched at the World Economic Forum in Davos, shows that CEOs everywhere are concerned about near-term economic growth prospects.

Trade tensions, geopolitical issues and lack of agreement on how to tackle climate change all contribute to a general sense of unease about the future, more so than has been reported in the survey since 2009.


However, the survey also shows that an agile strategy, a sharp focus on changing expectations of stakeholders and leveraging experience gained over the last 10 years of disruptive change, can help CEOs weather the storm and guide their organisations to thrive in a challenging environment.

Innovation stands out as the only viable option for the insurance sector to stay relevant in an ever-evolving consumer market.

Peering around the corner, enormous opportunities exist for Kenyan insurers, as individuals, communities and organisations seek to manage change and plan for the future. If the market was ever primed and ready to reap benefits of insurance, that time is now.

However, Kenya’s insurance sector players face some real challenges aligning their businesses to that underlying sense of urgency in the market and providing differentiated, value-adding products that focus on customer-centricity while building trust.

Addressing those concerns may sound like a tall order but other industries have been down this road before, such as the banking sector. Not long ago, Kenya’s ‘unbanked’ population was considered an unviable or unprofitable customer segment.

Today, financial inclusion in Kenya is at an all-time high — thanks to technology, innovation, trust and operational efficiencies. What is stopping the insurance industry in Kenya from realising similar growth trajectory among new customer segments? Nothing. At least, not superficially.

Kenya’s insurance sector has achieved premium growth of almost 35 percent since 2014. South Africa’s insurance sector has achieved almost 17 percent market penetration, compared to Kenya’s 2.83 percent, indicating room for growth locally — particularly in counties and cities outside Nairobi.

But overall, Kenya’s insurance sector has suffered from declining profitability and return on equity in recent years, largely due to operational inefficiencies and manual processes that drive up costs.

Adoption of technology will allow insurers to increase user engagement, which is low compared to that of the banking industry.

Fortunately, there are transformative technologies that can help to address these challenges such as robotic process automation of routine tasks, data analytics tools to facilitate cross-channel selling as well as fraud detection and prevention, and shared services centres to streamline operations.

Already, the recent survey analysis shows that over 80 percent of insurance companies in Africa plan to offer services through platforms optimised for mobile devices. This is a boon for attracting the next generation of millennial clients, who continue to gravitate towards mobile, customised services.

However, just 31 percent of Africa’s insurance companies plan to incorporate data analytics and another 15 percent consider robotics in the near future. Quality data and analytics tools can help insurers to derive insights about customers and inform strategies on top line growth and cost efficiencies.

Bernice Kimacia is a Partner and Gauri Shah is an Associate Director at PwC Kenya.