Technology to trigger higher penetration for insurance

Nigeria’s quest for increased market penetration and enhanced contribution to GDP in the nation’s insurance industry may not be far away again, given current technological revolutions going on in the market.

BusinessDay findings show that there are strategic efforts and investment in technology by insurance companies towards better distribution of products, collection of premium and customer interaction, which analysts say is the way to go for the sector.

According to analysts, while these efforts are capable of increasing product accessibility, particularly beyond the cities where most insurance companies have offices and intermediaries, it will excite the middle class and the youth age population who are technology savvy.

Insurance penetration to GDP in Nigeria according to 2016 figures from the Nigerian Insurers Association is 0.27 percent despite population of 180 million people, abysmally low when compared to South Africa’s 14.2 percent during the same period.

However, while a lot of progress has been made earlier in the area of motor Third Party Insurance being completed online without a face to face contact, latest developments in the market is advanced technology where Apps have been development to products including travel insurance and personal accident policies.

Akinola Odusami, promoter, Bidding Electronic Portal Odusami said it is obvious that Nigerians, particularly the elites are now getting used to buying goods and services online, pointing that a further step to create confidence and trust will impact positively on insurance industry growth.

Owolabi Salami of ensure Insurance Plc said everybody is moving towards technology to do almost everything, and so as an industry we don’t have a choice but to key in.

“Imagine that right on your phone you buy airline ticket, pay for it and is delivered to you; you buy an inverter and is delivered to you wherever you want it, so why not insurance”.

Salami said “we had relied on agency network to sell insurance for so long, but today, it has become cumbersome, we don’t have the number to cover the population area, and it is becoming expensive”

He said, insurance companies have begun to make a lot of investment in technology, to not only reduce business acquisition cost, but to also achieve accessibility.

“At ensure, we have gone beyond online portal for our products, we have gone step ahead to have an App that enable us sell right on your phone motor third party, travel insurance and personal accident policies.

At least 35 percent of insurance companies in the market have been able to develop online platforms that help customer interaction at different levels, for example buying motor policy online, verifying policy online, filing claims online, renewal among other things.

Remi Babalola, chairman, Law Union & Rock Insurance had said that with 92 million segment of the population as active users of the mobile phone, insurance business communication needs to change in order to achieve phenomenal growth in the insurance industry and financial service sector.

Babalola also said information available shows that the millennials have the capacity and are in fact influencing purchasing decisions as well as how companies conduct business.

“Insurers must therefore be ready to tailor their marketing strategies to align with the digital natives in order to achieve improved performance.”

He further stated that the insurance industry needs to embrace the strategic significance of social channels. “We need to be where the customer is and be part of the conversation where they interact, exchange opinions and levy complaints.”

According to him, insurance companies would need to allocate resources to study millennials’ habits and employ effective marketing strategies to sell multiples strands of insurance.

Experts have also noted that the explosion of social media provides great opportunities for direct sales to consumers.

Insurers will thus not have to rely on only agents and brokers, but will be able to reach consumers directly through alternative channels.

The Insurance technology is revolution is expected to usher in new underwriting models, disrupting traditional insurance distribution methods after many decades of stagnation.

To bring the industry up to speed with the pace of innovation and change apparent across global industries, insurers need to prioritise a sustained focus on modernization, according to A.M. Best recent report.

“Newer technologies can help insurers to become more efficient and to maintain a strategic advantage” noted A.M. Best.

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