Three Areas Digitization Will Transform Insurance


Monday, August 24, 2020  / 04:59 PM  /By Ekerete Ola Gam-Ikon  / Header Image Credit: The Digital Enterprise 


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"Insurance executives are complaining that policyholders are complaining!" This is probably the most compelling statement that will enable meaningful discourse on the value of digitization as the insurance sector seeks to remain relevant along with its actors - agents, brokers, insurers, loss adjusters, actuaries, reinsurers.


It is common knowledge that the greater percentage of our population are not aware and informed about insurance, so the hard question remains: Who will bring the awareness and information to them? Current efforts are good but far from enough for the size that needs to hear and balance what has been put out there by dissatisfied policyholders. 


To put it more explicitly, we may need to remind ourselves of what it means to be unaware of something. According to the Oxford English Dictionary (OED), unaware means "having no knowledge of a situation or fact", and other words similar to it include ignorant, uninformed, unenlightened, insensitive and innocent.


In a 2018 survey conducted by EFInA, a financial sector development organisation, 77.2% of the respondents said they were not aware of insurance while 4.9% said they had not thought about insurance yet.


Inform and Educate

So, the first area that digitization will address for the insurance sector is dissemination of information about insurance. I deliberately did not call it communication to avoid the high-end discussion that doing so has caused, leaving the implementation midway or aborted. Simply spreading useful information CONSISTENTLY about the meaning and relationship of insurance can go a long way in transforming the minds of people from being in the dark to becoming conscious of insurance and its value.


Like we know, information gives power, so when people become better informed about insurance, they will be able to compare it with what they have heard about religion and culture, which have been described as factors that debar people from taking up insurance.


Still on enabling information to reach people, those that have insurance will be even more excited when digital solutions acquaint them with details of their driving habits for example. Having a vehicle insurance will make more sense if I know that my good driving habits earn me points that can reduce the premium I pay and indeed other incentives like subsidized cost of servicing and premium for other types of cover.


All said, the information that insurance executives find difficult or feel reluctant to provide will be readily available to everyone, with the click of a digitized button.


Remember, the robot ever enjoys working without complaining!


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Respond and Settle

A second critical area that digitization will address for the insurance sector is response to enquiries and complaints from potential and existing policyholders (customers).


Ask three insurance executives about how to get insurance for your vehicle or home and you will most likely get 2-3 diverse responses as follows:


  1. "What's the value of your vehicle? Our rate is 2.5%, the best in the market and when it comes to claims, we are very prompt." This is usually from Marketing Executives or Tied-agents of insurance companies;
  2. "We can get you very competitive rates if we know how much you have to spend for the insurance of the vehicle." This is most likely from an insurance broker that influences the market trends;
  3. "You will need to give us a suitable time when you're in the vehicle so we can get the pictures and assess based on the information you've given us". Certainly from any executive in an insurance company that is transiting to the digital era and today, only a few insurers in Nigeria do this.


So, the question is: Which should a customer go with?


May be what will help us give useful answers would be knowing which of the three responders can best handle reports of accidents and their claims settlement process. Sometimes, this is even more important than taking up the insurance policy.


With digitization, the process of managing claims will become experiential as policyholders will click to submit the required documents and await payments. Understandably, no two reported cases are the same but the steps can be similar especially when the class of insurance is the same.


The way to do this in view of delighting customers would be to start the journey. With insurance in particular, nothing is perfect, so both the insurer and policyholder just needs to start with close observations by the agents and brokers.


Possibly with regards to claims management, it might be instructive for customers to take stories from Loss Adjusters concerning their work on some of the cases insurers have referred to them.


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Break into Bits and Rake in the Best

On the third area that digitization will address for the insurance industry in Nigeria, permit me to call it - Democratizing Insurance! Some have called it, retailing, while globally, the more acceptable term is Usage-based Insurance (UBI), though we have also heard Pay-As-You-Go Insurance, required especially for Motor, Travel and Health Insurance.


Customers do not understand how insurance works, since most people are not even aware of insurance, hence they are increasingly complaining about why they must pay a full year premium even when they need cover for a short term. This offering exist but insurers do not seem to have the operating and reporting model to deliver it, which is why we are hoping on digitization to fulfill it.


Often, insurance executives, in a bid to respond to such expectations from customers, encourage them to make premium payment by installments but the forthright insurers have not followed this path, knowing that the 'No Premium, No Cover' regime does not recognize this. 


Specifically, if a claim is reported when full premium has not been remitted, the insurer can lean on this provision, irrespective of the agreement with the customer, to deny claims settlement. This happens more when the amount due for payment is considered high.


Above all the benefits digitization will bring in the aforementioned areas, the insurance industry will be able to trace and track fraudsters before they go too far in their schemes to make fake claims or use their names to defraud other members of the public.


To expect insurance industry operators to aggressively invest in digitization could be inappropriate but based on one's knowledge of their challenges, including the regulator-led recapitalization, the three areas highlighted are invariably the low hanging fruits.


We look forward to the much awaited digitization at the National Insurance Commission (NAICOM) as restated by the Commissioner for Insurance recently and hope it propels more insurers to broadcast what they have done, so the insurance industry can attract the larger youth population


About The Author

Ekerete Olawoye Gam-Ikon, MNIM, CPP, is a management consultant with a specialization in Strategy and Insurance. You can contact him via e:mail and mobile +234-806-648-1111

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