Digital Transformation Challenges African Insurers Encounter

digital transformation challenges African insurers encounter

Forces within and outside the insurance sector enable the digital transformation challenges African insurers encounter. Insurance growth projections for emerging markets in 2022 is expected to see a 5.6-7.4% growth across the EMEA region, according to a SwissRe Institute report. For Africa’s insurance sector to rise and meet expected market projections, the continent insurers must also catch up with emerging digital insurance trends.

When the pandemic hit, it was an eye-opener for many organisations in the insurance sector. Hence, their need to accelerate or digitise certain functions was met with challenges and the industry lacked immediate solutions. We look at some of the challenges they faced and strategies to counter such challenges for increased policy uptake and portfolio profitability. 

5 Digital Transformation Challenges African Insurers Encounter

Fast-Changing Digital Space: Phasing out legacy technology to modern ones can be tricky. In some cases, new and improved technology is out on the market by the time the processes is done. The fast-changing nature of digital technologies makes it cumbersome for organisations to move as fast as they would love.

However, the truth is that if you don’t, you might eventually lose market share to the competition. Industry leaders need to look at their legacy technology and project how to adopt new but relevant technologies quickly. Such new technologies should allow at their core integrations that won’t cost a vast disruption or become a budgetary nightmare in the long term.

Low Acceptance of New Technology: Change is complex, and humans fight the change they don’t understand. This is true of digital transformation across the insurance industry, a phenomenon that is not unique to African insurers only. Digitalisation could easily be perceived as a threat rather than a partner or opportunity by professionals in the sector. 

The emergence of Artificial intelligence, big data and many more emerging insurtech technologies has proven that it enables the industry and its players to be more efficient and productive. For example, telematics and virtual inspections powered by AI can help underwriters become more efficient at delivering quality customer experience, saving cost, and reducing fraud, which is projected to be up to 10% of annual insurance budgeting for some organisations.

Organisations can save costs, and underwriters can deliver more swift and seamless service to consumers. Hence, leaders and professionals should adopt an open mind when context-relevant technology for the sector emerges. Constant training and retraining would help professionals see opportunities, adapt and grow faster.

Privacy Challenges and Regulation: The safeguard of private information is at the core of being a trusted organisation. Cyber security issues have heightened in the last decade, African insurers owe it to their consumers continued protection from identity theft and other cyber crimes that can be perpetrated with the private information of policyholders.

The continent’s laws and regulations can become bottlenecks to digital transformation for African Insurers. In some African countries, industry regulators require insurers to store and secure customer data only within the country. This means that emerging technologies that cannot meet such criteria with an insurer is dead on arrival.

Consumer Expectations: As consumer behaviours in Africa continue to evolve, insurers may struggle to match expectations. For example, when insurers and brokers began selling insurance online. They quickly learnt consumers behaviour now suggests that more than going online with insurance purchase, it needs to be embedded where they need it.

Whatever digital transformation solutions African insurers opt for, it must also continue developing the solutions offering with market trends.

Context Relevant Technology: Over the years, there has been a lack of context-relevant digital transformation solutions because it’s hard to re-innovate the technology stack for a sector like insurance. It is even more challenging if the development team lack a background in insurance to build relevant solutions. 

Digital transformation for insurance is just beyond software and codes. The development of value-adding technology solutions for the insurance industry must be built around existing premises, regulatory demands, unique rule-based requirements of different insurance covers, and professionals’ workflow for the technology.

Why Octamile?

Octamile is an African insurtech startup that helps Insurance and non-insurance businesses simplify access to insurance. We digitally transform claims processing, insurance distribution and risk assessment with technology and multiple data sources.

See our automated claims processing in action here. Are you an insurer? See how our solution can transform your portfolio, help you save cost and deliver a seamless customer-centre experience for new and existing consumers. Get started today, request a meeting here

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