African Insurance Barometer 2019: Technology and Data Facilitating Regional Expansion for African Insurers
| date: July 6th, 2019
Technology and access to data is helping facilitate regional expansion for African insurers. Technology has played a crucial role in not only enabling and transforming the US66.7billion African insurance industry but also in helping the industry leapfrog developmental stages, particularly the ones that would require costly infrastructures. A market survey report released by the Africa Insurance Organization (AIO) at this year’s Annual General Assembly held in Johannesburg, South Africa in June revealed this.
The annual report, the Africa Insurance Barometer 2019, provides the overall perspective of the industry that comprise a SWOT (Strength, Weakness, Opportunities and Threats) analysis whose findings are from interviews done with senior executives of insurance companies and intermediaries operating on the continent.
Technology is cited as having helped improve efficiency and claims handling and being at the core of new product development. Insurers now have greater flexibility and freedom to come up with new solutions that appeal to their target markets. Technologies like mobile are upheld as ‘a blessing’ to the industry with their ability to help reduce production and distribution costs and provide access to data about entirely new customer segments.
The African insurance regulatory landscape – according to the report – is rife with discordancy lacking clear coordination or harmonization across the various jurisdictions which is a threat to the industry’s development. Despite that many insurers seem undeterred in their quest to pursue regional expansion spurred on by technological advances and increased access to data.
The industry’s key strengths according to the report are the industry’s strong underlying growth and regulatory framework that have enabled it to weather past crises and strengthened the industry’s security as a whole.
Low financial literacy and inclusion (lack of insurance awareness and knowledge) and severe shortage of talent and skills remain major hindrances to the industry’s development. This is in part due to insufficient investment by the industry in education and recruitment and also having to compete with other more dynamic and attractive financial services providers like banks with better perks.
As much as it’s a strength, regulation is also seen as a weakness. There is acknowledgement of the need to strengthen the industry’s oversight through regulation in order to improve security and confidence and eliminate some of the industries excesses such as the ruinous pricing practices in some markets.
Overall, the report indicates that insurers seem to be more cautious about their industry’s outlook than the previous years but at the same time upbeat because generally the awareness and understanding for the strengths and benefits of insurance seem to be improving among policymakers, regulators and consumers.