COVID-19 Impact on the Disability and Life Insurance Market in Sub-Saharan Africa: Digital Insurance as a solution.

Problems brought about by the COVID-19 crisis with regards to disability and life insurance products, processes and services include the following:

·        Low rate of onboarding due to social distancing and impracticality of fluid-less medical underwriting

·        Distribution slow down

·        Lapsed policies due to affordability

·        Increase in market apathy and inertia

·        Rising operational costs for insurers

·        Reduction in premiums

·        Increased claims ratios due to HIV/AIDS burden

COVID-19 has put life and disability insurance on life support! Global premium revenue is set to decline by 1.5 trillion rand and this figure could further increase in the long term due to hysteresis. Hysteresis in the field of economics refers to an event in the economy that persists into the future, even after the factors that led to that event have been removed. Even after COVID-19, insurance as we know it will have changed forever! However, all hope is not lost – the solution lies in insurtech innovation. The end of insurance as we know it will lead to emergence of new market leaders in the post COVID-19 era. There will be no return to the previous 'normal' due to hysteresis and digital insurers are set to emerge as winners despite the above listed market changes.

Industries with high regulation such as the long-term insurance suffer from complacency. Insurtechs are unfettered by the bureaucratic, regulatory and corporate red tape constraints of the insurance industry albeit needful. In my opinion, it would be better for insurers to invest in an insurtech that has innovation at the core of its business model and identity rather than attempting to do it in-house as this can help spur the type of disruptive technology and innovation that an insurer is seeking. It has become a trend for insurers to work with at least one insurtech either by acquisition or partnership in order to innovate. The COVID-19 crisis has made this even more needful so as to solve the associated challenges. Insurtechs are often the key to driving innovation, with small budgets and often little funding, they have an inherent 'innovator' business model and move swiftly.

The success formula for insurtechs in the long term insurance space is using innovation to obtain and retain customers. Customers in long term insurance are a unique type of insureds who are typically recovering from a devastating illness or injury; lost employment, have ill-health burden, functional limitations, incapacity and dealing with loss. Technology and innovation empower insurers to help customers in their greatest time of need and better fulfill the promise to pay.

Regulators in the long term insurance space in Sub-Saharan Africa are by and large silent on the innovative use of artificial intelligence in insurance and grey areas exist. Needless to say, by the time regulations catch up with innovative insurers who embrace insurtechs, they may have already taken your customers and market share. It literary happens overnight. Innovative insurers that are known to have swiftly undercut the South African disability and life insurance market showed us that change is so fast and at such a scale that it is already too late for legacy insurers to catch up.

Technology is now even a more critical enabler and enhancer for agents, brokers, and call centers to generate leads, provide quotes and issue policies via digital channels. Artificial Intelligence [AI] and the Internet of Things [IoT] will shape future products and business processes like distribution, claims and underwriting and pricing. Insurers who will emerge strong from this COVID-19 crisis are the ones that embrace digital transformation to overcome the above listed negative effects on disability and life insurance products, processes and services.

Please contact me ([email protected]) for any questions and solutions on disability and life insurance transformation.

Africa’s no. 1 Insurtech in Disability and Life Insurance Innovation

·        AI-Driven Lead Generation

·        Contact-Less Digital Distribution

·        Algorithm-Driven Insurance Robo-Advise

·        Disability and Death Risk-Profiling Questionnaire

·        Higher Conversion Rates

·        Accelerated and/or Fluid-Less Medical Underwriting

·        Disability and Life Insurance Product Online Education

·        Intelligent Claims Assessment and Reviews

·        Predictive Analytic Reduction of Risk

·        Wearables (Sensor-Enabled Devices e.g. Smart Watches)

References:

Nobula, L. (2020). Artificial Intelligence in InsurTech: Disability and Life Insurance Innovation. Brandfire Publishing 

Nobula, L. (2016). Disability Insurance Simplified: A short guide to disability insurance and the claim process. Brandfire Publishing 

CDC. Coronavirus Disease 2019 (COVID-19) in People with HIV [Internet]. Centers for Disease Control and Prevention. 2020 [cited 2020 June 25]. Available from: https://www.cdc.gov/coronavirus/2019-ncov/specific-groups/hiv.html

SpingerLink. The Burden of COVID?19 in People Living with HIV: A Syndemic Perspective. 2020 [cited 2020 June 25]. Available from: https://link.springer.com/article/10.1007/s10461-020-02871-9