6 good reasons why insurers need tech

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Luckily, we have seen certain pockets in the insurance industry follow suit, such as Lemonade, which launched an AI claims bot. It has the potential to investigate and approve a personal lines claim in a record, yes wait for it, three seconds. This is a giant leap for the insurance industry. Proper use of technology will vastly improve customer experience. It will also allow insurers to properly assess a client’s exposure, underwrite and price it appropriately.

To stay relevant, insurers must adopt technology and redefine their market. According to the Automobile Association (AA) between 65% and 70% of the 11,4-million vehicles on the road are uninsured. Why is this? Simply put, a vast number of South Africans can’t afford insurance. Our industry needs a concerted effort to provide every single South African access to affordable insurance.

This won’t be easy. The industry faces many challenges in 2018 which needs to be attended to. They are:

Changes in regulation

There are many expected changes to local regulation that will have significant effects on the insurance industry. These include the Retail Distribution Review (RDR), Policy Protection Rules (PPR), Protection of Personal Information (PoPI) and Treating Customers Fairly (TCF). Insurers need to properly understand the impact of these changes and ensure they have systems and processes in place to properly manage them.

The effects of climate change

Insurers need to properly understand and prepare for more frequent and severe weather incidents. This could be as varied as more severe hailstorms in certain regions and more droughts in other.

Staying ahead of technological innovation

Robotics could reduce time spend on mundane tasks and artificial intelligence could enhance decision making, but at the same time, cybercrime is on the rise. Insurers struggle to come to grips with technology that is developing faster than they can cope; drones, cybercrime and driverless cars are just a few developments that need to be internalised and understood.

Attracting millennials

There are indications that millennials now outnumber other working generations. However, there are very few insurance products that actually cater to their needs.

The retention of technical skills

The insurance industry has been losing its technical skills at a rapid pace. Very few people leaving school choose insurance as a career. The lack of skills has a negative impact on customer experience and will result in increased premiums as risks are not properly assessed and mitigated. The industry will have to introduce accelerated learning programmes to ensure we build the skills the industry needs.

Collaboration for future success

Besides the many challenges, the insurance industry is well positioned to better predict, anticipate and adapt their approach to the dangers of climate change. Insurers should partner with local government to firstly get an appreciation of the level of accumulation and secondly to prepare an integrated and holistic disaster management strategy. By doing this, the damage caused by localised flooding can be managed if the exposure is understood and development of new property in flood zones and high-risk flood areas is carefully managed or discouraged.