Emerging market insurtech companies are set to play a major role in the predicted rise of premium growth across the global insurance industry.
This expectation has motivated Sanlam to become the first South African insurtech partner to the Plug and Play global innovation platform, based in Silicon Valley.
Munich Re’ prediction that the insurance industry’s growth will outperform the global economy in 2018/19 with global premium growth of over €460-billion, has therefore resulted in the potential creation of an African hub for Plug and Play, which is set to see ripple benefits with win-win scenarios for global startups and African insurtech companies.
“The market landscape in South Africa is in a unique position to embrace startup solutions in providing innovative products and services to customers,” says Plug and Play founder and CEO, Saeed Amidi. “We’re delighted to be partnering with Sanlam and feel we have much to learn from one another.”
Sanlam has received recognition for its backing of first-of-its-kind solutions like Go Cover, which offers on-demand accidental injury and death cover, and Indie Fin – a digital-first insurer which simplifies life insurance for “the mobile generation”. Both provide quick, easy offerings with slick user interfaces. They demonstrate an iterative, agile approach to product development, with fast execution and performance-aligned revisions. Agility is a buzzword in business currently, and it’s one of the predominant benefits of insurtech solutions.
Ahmed Banderker, chief executive of Sanlam Business Development, lists some of the biggest global trends in the insurtech space:
* The evolution of ecosystems: An ecosystem is defined by McKinsey as ‘an interconnected set of services that allow users to fulfil multiple needs from one, integrated experience’. In its report, McKinsey predicts that by 2025, ecosystems will be responsible for 30% of global revenues. Insurtech startups are pivotal partners for insurers looking to move to the ecosystem space – a space Sanlam already operates in, especially in conjunction with short-term insurer Santam.
* The Internet of Things: The IoT refers to Internet-connected devices, vehicles and so forth, that can “connect, collect and exchange data”. For insurers, the IoT offers phenomenal potential in terms of product and user-experience personalisation, streamlined client interactions and data collection. According to Deloitte, 80-million smart home devices were delivered worldwide in 2016, with over 600-million expected to be in use by 2021.
* Changing customer expectations: With the rise of the IoT, robotics, artificial intelligence and automation, customers are expecting more. People expect an omni-channel communication approach via the channels (like WhatsApp, email) they naturally gravitate towards. They expect immediacy. They are starting to respond positively to robo-advice. They’re motivated by gamification – especially in the financial education space. From a gamification perspective, there’s much work to be done in the consumer education space around financial literacy, in the South African market especially. In terms of immediacy, it may soon be a case of simply sending a ‘selfie’ to an insurer, who’ll have the facial recognition software required to assess a client’s longevity just from a photo.
* Advanced analytics: In the insurance space, big data and analytics are particularly important. Everything is based on data so a focus of insurtech is not just how to capture it, but how to intelligently use strategic insights to streamline underwriting, lower costs and enable online distribution capacity.
* Microinsurance: Insurtech has positive implications for microinsurance, which aims to offer affordable cover to low-income households. Automation and robo-advice, for example, are helping to bring down insurance costs, potentially making products more accessible.
* Personalisation: Data and analytics are driving mass policy personalisation at an increasingly granular level. Sanlam’s acquisition of BrightRock – a personalised, needs-matched life insurance provider – is testament to its belief in personalisation as an upcoming necessity. Personalisation of user experience is another focal point.
Banderker comments: “Our Plug and Play partnership means we can present a problem statement and startups across multiple verticals will pitch solutions. So a problem that may seem to sit in the insurtech space could be solved in the Fintech or Retail vertical. Access to this kind of ecosystem is invaluable.
“The beauty of startups is the agility they offer in creating intelligent solutions to specialised problems. This modular approach catalyses speedy solves. Then you put all the solves together and you have something truly unique to offer clients. Which is what our client-centric approach is all about.”