Part one of a talk by Tavio Roxo, CEO of Owls Software, at the 44th OESAI (Organisation of Eastern & Southern Africa Insurers) Conference in Zanzibar.
There are a multitude of reasons that might underpin why perhaps the insurance industry in the African continent requires improvement and the many factors that ultimately contribute to that image. But my focus will be on the technology, and more specifically how the use thereof could be a catalyst for the improvement of our insurance industry’s image with all stakeholders on the continent.
I believe 2007 was an inflection point in all our personal technology journeys. It was the year that the iPhone was launched for the first time and the year we started our company here in Africa. Blackberry, Nokia, and Sony Ericsson were the dominant players and had set the gold standard for communication at the time. They were analogue phones and at their time they had revolutionised the communication world…in that if you had one of those devices in your pocket (not only did you look cool) but you were able to communicate with anyone on the planet via email or with a call.
It is strange that if we look at the cell phone landscape today, neither Blackberry, Nokia nor Sony Ericson are relevant players in the market. All three were really big businesses at the time. Combined, they penetrated over 80% of the cell phone market at the time.
They never believed they could be displaced. What ultimately led to their demise however was a failure to realize that there was a step change happening. The step change in that industry at the time beginning the move from analogue or feature phones to smartphones and ecosystems.
What was apparent in the insurance industry at the same time, and what might still very much be the case today (albeit to a lesser extent), was that many stakeholders in the insurance value chain had a very clunky, manual and frictionful journey to execute on many of the administrative tasks in the insurance lifecycle. This was mainly because of a structural limitation which I could call a “fragmented technology landscape.’ Not dissimilar to analogue phones.
A pricing specialist in an insurance company would use a pricing tool built specific to their requirements while the underwriting an onboarding team uses another technology or various technologies. The policy servicing and claims departments in turn used yet a further set of technologies. This carried through to the finance and claims departments. All these systems worked well in their area of control but one of the issues of course was they would always have to defer to a financial system to operate.
To get an overall picture of the business, yet another system would have to be deployed across the entire organisation to do the reporting. Data lakes, data warehouses, data repositories… We all know the terms. The amalgamation of multiple data sets from multiple systems to get an overall view.
So, to avoid all the above, and to get an overall picture of the entire business, we noticed that some companies would then simply bypass it all and use excel. Of course, all the above is not ideal technologically speaking and inefficiencies manifest into the environment.
Firstly, it creates a software world in your business where you have different resources in various parts of the organisation developing different skill sets to operate and service different systems and architectures. This is a costly and inefficient way to allocate resources and operate.
Secondly, this fragmented software environment does not allow you as an insurer, administrator, or broker to create any coherent digital journey within your organisation for a customer or stakeholder.
Thirdly and possibly the biggest problem of all is that there is a misalignment of data.
You see, with misalignment of the data, i.e. One system providing a record which deviates from the second system’s record, it creates a world where a fair amount of time and effort is spent by expensive resources within your respective organisations trying to extract, transform and align data to provide something as simple as a report that accurately depicts the truth.
The subtle (or not so subtle) effect, of course, is that business loses faith in the data, and the systems, and with it, trust. If a business cannot trust its data. How can external stakeholders?
OWLS™ Insurance Software
Proud providers to insurance companies, UMA’s,
administrators, intermediaries and financial services companies.
In the book, Modern Monopolies, authored by Nicolas Johnson, the author, sets out to explain some of the characteristics of the world’s most successful platform businesses like Facebook, Airbnb, and Amazon. It is telling that all these organizations did not exist 15 years ago, and yet today are ubiquitous in our daily lives. Another example of how tech fundamentally changes the landscape with a step change into a modern technology mindset.
in this case a platform business vs traditional business models at the time. The author goes on to explain how in the initial years (2003) Amazon struggled to gain traction they had started selling books then branched out into the creation of a platform for sellers to sell their products and buyers to buy their products. The Amazon we know today.
It was only when Amazon introduced ratings for both sellers and buyers, that the platform really took off. The introduction of this seemingly benign rating functionality, it changed the game. Now, as a buyer, you could have confidence that the seller was in fact going to deliver the items that you bought. A seller could only defraud one person as they would be called out.
The author attributes the introduction of reviews as transparency to the seller and/or buyer and ultimate trust in the platform and we know people have a propensity to transact when there is trust.
How do WE build trust? – So, how do WE build trust in our organisations and by implication build trust with the various external stakeholders and importantly, the ultimate policyholder?
A good start to building trust is transparency and inclusiveness. Technology is the ultimate tool for that. Dr Baghayo Saqware mentioned earlier how inclusiveness is a pillar of sustainability for our continent. It is with technology that any customer can go down to the most granular detail and have comfort on a journey that is predictable, reliable, fast, and inclusive.
If the customer has multiple interactions with your organization and they are all predictable, reliable, and fast…that builds trust in your organization and us as an industry. How then do you build a technology that can create trust in your organisation? Well, you need to start with an end-vision in mind. The end vision for me here can be nothing less than taking a customer/client/stakeholder on a digital journey within your organisation. Quite like that of Amazon and Takealot. Buy. Service. Claim. An end-to-end journey.
It is only with an end-to-end journey that you as an insurer can build scale. I say that this is what we all must strive for because if I look around at the youngsters today (and I am the oldest person in my business) they do everything online. When I spoke at the InsurTech 2022 Conference in JHB a few months ago, I made mention of my daughter who, at the age of 9 was meeting with her overseas friend in a digital world called Minecraft. They were meeting at a house that my daughter had built in one of the virtual worlds. In 10 years, my daughter and her entire generation will not transact the way you and I do. So, we must start putting in place those building blocks that will allow us to do exactly what our vision requires to be relevant as businesses in the years to come.
As we go on this IT journey, a recognition that Africa as a continent has a history of leapfrogging the world through using tech must alert all of us in this room that this shift to digital is happening already. Africa now accounts for 70% of the world’s 1 trillion dollars’ worth of mobile money value transactions. Very telling of course is that Africa’s mobile money transactions moved up from 495 billion dollars in transactions in 2020 to USD 701 billion in 2021. That is a jump of 39% year on year, one year ago.
As a tech business we have learnt several lessons over the years in terms of technology and the building blocks that are needed to execute on that digital vision. I would like to discuss 3 important technology attributes as you commence on your digital journey. Before I run you through these 3 items… let us pause for a second and contemplate what was said earlier…The African continent has 1,4 billion people… with 60% being below 25, There currently exists a massive opportunity for simple, light touch life and non-life insurance products. That scale can only happen sustainably with the use of tech
Okay. So, what are the architectural attributes of a tech stack for this journey? In part two of this discussion, I will take you these attributes that allow industry players to create a tech stack for the future of insurance, now.