Digital transformation is no longer a choice, but a necessity. Over the past few years, the insurance industry has experienced tremendous change as various challenges erupted, such as declining economic conditions, which were worsened by the Covid-19 pandemic.
Traditionally, the insurance industry has been conservative, but lately it is nothing new to engage with an insurer through chat bots or virtual assistants. Not only did the poor economy and the pandemic bring about incomprehensible losses, but it also placed businesses and the insurance industry on a path of digital innovation and growth.
A report by Deloitte reviewing the global insurance industry states the industry’s systems and capabilities improved during the past year, while talent and technology strategies paid off.
The road ahead is scattered with multiple hindrances like rising inflation, interest rates, economic uncertainties, geopolitical upheaval and increasing competition from techs and non-insurance entities. The Deloitte report advises that the insurance industry must continue building on the momentum of an ongoing culture of innovation, shifting from operational transformation to fully realising the value that technological developments and upgrades bring. Pandemic-spurred digital enhancements include new products and services, distribution points and seeking out underserved consumer niches.
“Insurance coverage for emerging exposures will become an essential consideration as the industry grapples with the complexities of cryptocurrency, non-fungible tokens (NFTs) and virtual activities on the metaverse,” said Biniam Ghirmatsion, Executive of Wealth Management and Bancassurance at Nedbank Namibia.
Ghirmatsion noted that both the Namibian financial and non-financial sector regulators have shown their consideration and interest in the changing landscape involving innovative technologies. In August 2022, the Namibia Financial Institutions Supervisory Authority (NAMFISA) launched Fintech Square, which is a platform where the regulator meets the innovator. Essentially, it is an innovation hub providing an opportunity for innovators to participate safely in the transformation of the financial services’ industry. According to NAMFISA, it is a move towards their envisaged regulatory sandbox. The Bank of Namibia also issued a Fintech Innovations Regulatory Framework to provide guidance on how the bank would treat financial technology innovations that are not already subject to existing legislation.
“We are also seeing the continued rise of the application programming interface (API) economy,” Ghirmatsion commented. In simple terms, an API is a set of rules which govern how one piece of software interacts with another. In recent years, there has been an explosion of APIs as companies seek to open their data and functionality to third-party developers. Examples of how insurers use APIs include providing clients with real-time quotes, powering chat bots, and enhancing digital client service tools. The growth in APIs are expected to continue in popularity as the need for digital integration increases. Many traditional businesses are now looking to open their data and systems to third-party developers to create new digital experiences.
Returning to Namibia, NedNamibia Life Assurance Company Limited (NedLife) embraced new digital advancements by seamlessly integrating the technology with its current operational structures. Its clients can now apply for funeral policies by scanning a QR-code, and using its ‘selfie’ application to take out funeral policies. Clients can also use the Nedbank Money app to access funeral policies, while doing their usual banking on the app.
At the release of their latest annual report on 31 December 2021, Kenneth Simataa Matomola, Chief Executive at NAMFISA, observed that the industry maintained a sound financial position, with excess assets and sound solvency levels above prudential requirements. By the end of December 2021, total long-term insurance assets grew by 8,1% to N$66.7 billion, and total short-term insurance assets increased by 10.8% to N$7.2 billion.