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Potential for Africa to be a leader in digital insurance: Allianz

28th July 2017 - Author: Luke Gallin

The African risk transfer industry has the potential to transition itself into a global digital insurance leader, driven by customer demand for innovative solutions and favourable rules and regulations, according to Allianz Chief Executive Officer (CEO), Oliver Bäte.

African map and flagsSpeaking at the 44th annual Insurance Conference in Sun City, South Africa, the Allianz CEO discussed the huge change technology is bringing as it sweeps through the global insurance sector, looking to increase efficiency and ultimately disrupt the marketplace.

“The insurance industry, like other customer service industries, is transforming because of the all-encompassing impact of digitalization on our lives. Customers have new expectations, a growing number of disruptors are taking the stage and new megatrends, such as artificial intelligence (AI), voice-based smart assistants (i.e. ‘Alexa’), telematics, wearables and drones are fundamentally changing the traditional insurance model,” said Bäte.

While the African insurance and reinsurance market lacks maturity, with some African countries’ markets being far more advanced than others, Bäte explained that digitalisation comes naturally to African customers, especially when compared with some other markets, such as Europe.

“While traditional markets, such as Europe, are struggling with their digital transformation process, Africa is digital by nature. Mobile is the fastest growing sector and innovation enabler on the continent with an expected 1.2 billion African subscribers by 2018.

“By leveraging the internet and mobile penetration, African countries can leapfrog innovation. African customers will rightfully demand and drive insurance innovation in Africa as they expect offerings and channels to be fully digitalized. This, and the fact that rules and regulations are favorable for innovation in financial services, puts Africa in a great position to become the digital insurance leader of the future,” said Bäte.

Bäte raises an interesting point. While it could be said that Africa’s insurance market is still emerging, for the most part, and lacks the sophistication, depth and understanding as seen in more advanced markets of the world, such as the U.S. and parts of Europe, the region utilises the internet, mobile technology and alike to boost insurance penetration in remote, vulnerable, and poorer regions.

African customers are therefore already used to digital insurance, perhaps more so than customers in more advanced markets of the world, and as the global insurance sector pushes towards a truly digital marketplace, Africa has the experience and skills to support the digitalisation drive, with many examples of how digital insurance can work.

“Insurance companies have much to offer to the African economy. Digitalization allows us to gain considerably better insights into our individual and institutional customers and thereby to better serve their needs. We believe deeply in Africa’s huge long-term growth potential and we will leverage our global footprint and extensive expertise to strengthen our market position and to attract African talent,” said Bäte.

Allianz has plans to become a “digital by default” firm, and established a Single Digital Agenda in order to achieve this. The insurer plans to spend around $800 million a year on the digitalisation of its business model. The Single Digital Agenda is built on five pillars, says Allianz, being the Allianz Global Digital Factory; Global Digital Partnerships; Digital Pure Play; Advanced Business Analytics; and Allianz X.

The company also said that in Africa it will focus on boosting customer reach in key growth areas that lack insurance penetration, and increasing efficiency in markets that have higher insurance penetration.

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