The major trends and innovations that are refining the landscape of insurance distribution

By Roeann Lazarus , Underwriting Head: Financial Lines at SHA Risk Specialists

The South African insurance market – much like its global counterparts – is highly responsive to major economic, social and technological shifts. One of the areas in which transformation is becoming increasingly evident is insurance distribution channels. Current-day clients are up against a barrage of emerging risks and challenges, and major players in the local insurance distribution network need to stay ahead of the curve to meet their changing needs and demands.

Insurance distribution channels are designed to efficiently create and connect insurance solutions to clients, and to make those solutions easily accessible via different portals. In the fast-paced and ever-evolving digital age, there is simply no ‘one-size-fits-all’ solution to reaching clients in a way that caters to their individual expectations, preferences and profiles.

For local insurers, this has necessitated the adoption of multi-channel distribution models, through which they can expand their reach and provide the high level of expertise and flexibility required to remain top of mind in an increasingly competitive landscape.

According to GlobalData, the South African insurance market was valued at over R150 billion in 2023. Since then, the rapidly expanding influence of InsurTech players and other industry disruptors, have significantly widened the scope of the industry and propelled the drive to deploy more modern, innovative tools of distribution.

The transformative power of technology

Technology is one of the major drivers of change in terms of how insurance products are distributed, developed, and sold. Innovations such as comparison websites, chatbots, web portals, advanced algorithms and mobile apps have had a profound impact on how insurers reach their target audiences and how they are perceived in the marketplace.

Most recently, ‘traditional’ distribution channels are leveraging new data analytics models and artificial intelligence (AI) to assess risk more accurately, analyse client behaviour and classify industries.

In addition, the introduction of automated underwriting, claim processes and workflows have greatly reduced administrative strain, and enabled more personalised interactions and quicker response times. In the years to come, developments in AI and data architecture will undoubtedly pave the way towards a better understanding of the customer and help build a more customer-centric industry.

Complex risks require specialised insight

Recent years have also seen a noticeable rise in intermediaries and the growing importance of their role in helping clients mitigate risk and understand insurance products. This change has been triggered by emerging realities such as the rise in cybercrime. The dramatic upsurge in cyber threats and attacks, for example, has highlighted the crucial need for specialised knowledge on how to protect digital assets through greater awareness and vigilance, cybersecurity measures and cyber insurance.

These more specialised, niche markets require a deep understanding around complex risk as well as the development of novel solutions. This in turn, is where human intervention has become a critical differentiator.

Furthermore, shifts in the regulatory landscape and compliance issues have added to these complexities and shed light on the growing need for more effective and efficient risk evaluation and assessment, as well as the need for well-rounded and holistic solutions. Here, the ability to offer value-added services in the form of tailored products and advice will continue to prove invaluable.

A different kind of client

The clients of today are a far cry from the clients the industry has serviced in previous decades. Influenced and equipped with the latest technology and faced with new, impending types and levels of risk, clients’ demands have shifted significantly.

There is a growing need for flexibility on demand as well as greater levels of accessibility through multiple touchpoints. To optimise the opportunities, insurers need to employ distribution channels that can speak to different market segments – to meet them where they are and on their own terms. This shift towards a more diversified and technologically advanced distribution network reflects the changing preferences of consumers who seek convenience, transparency, and efficiency in their insurance purchasing experience.

In general, therefore, the insurance distribution channels of the future will need to become more agile, more adaptive and increasingly more robust.