African Insurance Sector Faces Digital Transformation Challenge

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Insurance is often personal. Even when a large institution acquires an insurance policy, it’s frequently through personal relationships and trust. Customers feel their needs are genuinely being addressed by their insurance representatives. While digital technologies have improved insurance distribution, personal interactions remain crucial for growth.

The Predominance of Person-Led Sales in Africa

In African countries, the insurance landscape is unique. A staggering 80% of insurance groups rely on person-led sales and servicing. This approach stems from the deep-rooted trust and personal connections that are essential in the region’s cultural context.

However, despite the rise of digital technologies, distribution remains inefficient. The cost to serve is still too high, and the speed to serve remains too low. This inefficiency poses a significant hurdle for insurance businesses aiming to scale their operations while maintaining personalized service.

african insurance sector digital transformation

Overcoming Digital Barriers in South Africa

“The challenge for digitisation in South Africa is twofold,” explains Carl Blake, Enterprise Account Manager at ServiceNow. “The first one is data and the cost of data, and the second one is the demographic that we are selling to.” Access to digital services is still limited due to high data costs and restricted access to devices. Creating a seamless distribution system is expensive, and integrating digital systems with person-led sales is proving difficult.

Key Challenges:

  • High Data Costs: Making digital services accessible remains a financial burden.
  • Demographic Factors: The target audience often prefers personal interactions over digital channels.
  • Legacy Systems: Older systems hinder the integration of new digital solutions.

These challenges highlight the need for innovative solutions that bridge the gap between digital efficiency and personal customer service.

Legacy Systems: The Hidden Barrier

Insurance remains a people’s business in South Africa, especially when it comes to sensitive policies like funeral plans. “Selecting a funeral policy is a culturally sensitive and personal process for many South Africans,” notes Blake. This personal touch is hard to replicate with purely digital solutions.

Moreover, legacy systems present a significant obstacle. “There are insurers with systems that were developed in the 1990s and some even earlier,” says Jack Govender, Solution Sales Executive for Customer Workflows at ServiceNow. These outdated systems are still in use because they service long-term policies and cannot be easily replaced or repurposed.

Legacy System Issues
Impact on Insurance Distribution
Complex and Custom Tools
Slows down integration with new digital systems
High Maintenance Costs
Increases overall operational expenses
Limited Flexibility
Restricts the adoption of innovative solutions

Addressing these legacy barriers is crucial for insurers looking to modernize their operations and improve distribution efficiency.

Embracing a Unified Digital Ecosystem

To break the stalemate, insurers must integrate and automate their various systems into a unified digital ecosystem. This approach involves creating a single digital thread that ties together multiple applications and processes, enhancing both customer and broker experiences.

“A modern service platform that focuses on insurance verticals connects multiple applications and digitises the processes across these applications in a simple way,” explains Muhammed Omar, ServiceNow’s Country Manager for Africa. This integration allows for consistent engagement from customers, partners, and back-office operations, making distribution simpler and faster.

Benefits of a Unified Platform:

  • Consistent Customer Engagement: Provides a seamless experience across all touchpoints.
  • Increased Efficiency: Streamlines processes and reduces administrative tasks.
  • Enhanced Profitability: Companies become 1.5 to 2.8 times more profitable with reduced costs.

Service platforms like ServiceNow are pivotal in uniting digital innovation with human capital, ensuring that insurers can offer enticing products and relevant information while meeting regulatory requirements.

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Davis Emily
Emily is a versatile and passionate content writer with a talent for storytelling and audience engagement. With a degree in English and expertise in SEO, she has crafted compelling content for various industries, including business, technology, healthcare, and lifestyle, always capturing her unique voice.

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