The changing African digital (insurance) market

Even though digital is still to reach widespread adoption in Africa, it presents insurers with exciting new opportunities for business growth. Annalie Terblanche, client solutions manager at SilverBridge, takes a closer look.

While there is the temptation to believe that Africa is a digitally-led continent, the reality for insurers is quite different. Certainly, the adoption of mobile wallet solutions like M-Pesa is cause for excitement, but businesses still struggle to maintain the most basic of services such as the collecting of monthly insurance premiums.

Hurdles to overcome

Part of this can be attributed to the large unbanked population on the continent. With research showing that 66 percent of people in Sub-Saharan Africa do not have a bank account, insurers have a difficult obstacle to overcome.

Those who do have bank accounts often struggle to fund them in time for debit orders due to irregular payments of wages. Clients are reluctant to commit to debit orders as the penalty for non-payment is significant. Furthermore, brokers and agents are still predominantly reliant on manual sales processes which see them meeting with clients, completing application forms, and then carry them around to submit to the insurer later. Forms get lost or data provided can be incorrect or incomplete, which results in inflated onboarding costs.

Finally, communicating with policy holders is a challenge. Many people do not have post boxes or even traditional street addresses. Email is even more difficult as they are reliant on community centres for internet access and computer facilities. While SMS messages might seem to be a likely solution, they are expensive for insurers to manage at scale.

Fortunately, thanks to digitalisation, these challenges are not insurmountable.

Alternative solutions

However, for digital to take a foothold, insurers must think differently about how they approach products and services. While some are testing alternatives to traditional offerings, the road ahead is still quite far.

But just consider the opportunities that using mobile money or even airtime to pay for insurance premiums unlock. In that way the customer can get cover immediately while the insurer experiences premium income.

With Africa a cash-driven environment, the insurers who are likely to succeed in digitally transforming their businesses will be the ones that can marry the old with the new effectively. For example, SilverBridge has partnered with Meniko Records Management to develop a mobile application that looks exactly like a paper-based insurance form. The broker can complete these while visiting a client, take photographs of their ID document and upload it immediately. It even has offline functionality built-in to automatically update once within cell tower reception. The agreement is focused on streamlining the business processes of customers and not generate any paper-based documents.

A new world

Africa is open to embracing digital and making it easy for people to pay with cash and alternative methods. Mobile applications certainly present insurers with a more effective way of dealing with customers across demographics.

While digital might take a long time to roll out across the continent, the benefits for insurers and their customers will make doing business so much easier and more cost-effective.