Shifting data landscape – the game changer in the insurance industry in Kenya

The insurance industry in Kenya is in a transition phase and will remain so for the next few years as Insurance Companies grapple with the understanding and implementation of IFRS 17 – Insurance Contracts. The standard was released May 2017 and takes effect 1 January 2021, bringing with it significant changes in the industry.

Insurance companies will now have to re-look at their valuation models, capability of current systems and assess the changes to be made to ensure compliance with the new standard. Salient among these changes is that Insurance Companies will require more data at a granular level to meet the new reporting requirements.

This represents a big opportunity for the Industry to grow its data analytics capability. Data analytics refers to the analysis of data with the aim of discovering existing trends in business data and drawing conclusions that inform future decision making. The risk – price relationship in insurance places data analytics at the very core of the insurance set up.

With requirements for increased data capacity and systems to match within the framework of the incoming IFRS 17, insurance companies will have at their disposal a treasure trove of information that remains very relevant in the running and growth of the business.

Through data analytics, insurance companies can assess products based on factual historical data and can even narrow down to a geographical location. This is an opportunity to move away from the one-size fits all approach and instead tailor make insurance contracts to the insured’s needs. Different locations and demographics in the Kenyan market face varying perils and have unique insurance needs. The analysis of data allows for a strategic and informed re-think of product packaging to more relevant, affordable and need centric insurance covers.

Could it be that the low insurance penetration in the Kenyan market is driven by amongst other things, the generic nature of available products? The marketing function could well make use of such data and roll out ‘targeted marketing’ to reach the populace with a personalized message and relevant products.

Insurance companies that will strategically invest in the data analytics space will differentiate themselves from their competitors. With increased comparability and results transparency being at the fore of IFRS 17, the competition for market share in the insurance sector will increase.

Through the analysis of existing data, insurance companies are already looking to re-evaluate and disintegrate risks attached to various products. This will ultimately lead to a superior pricing mechanism that is bound to give them competitive edge. The separation of underwriting results from investment income in the new framework will distinctly bring to the fore the true source of earnings for insurance companies. Stiff competition in the past has resulted to some players in the industry resulting to price undercutting – offering lower prices to lock down business instead of pricing based on the risk insured.

Insurance companies that will assess risk supported by insights from data analytics will therefore be ahead of the curve in complying with future potential guidelines from the regulator to clamp on price undercutting based on the shift in reporting requirements.

Fraud in the insurance sector remains a reality. The numerous players in a typical insurance contract does little to alleviate the risk of collusion. Through data analytics, Insurance companies can establish trends based on historical transactions and in particular loss making contracts to assess for indicators of fraud. Trends and analytics will allow for comparability among intermediaries enabling insurance companies to interrogate the quality and cost of business from specific intermediaries.

Fraud remains a perennial challenge due to the lack of data sharing across insurance companies. Be it the non-existence of data, lack of uniform data or the high set up and maintenance cost of a centralised set up to house and stream data to and from the various insurers, none of these challenges measures up to the ever increasing cost of fraud year on year.

Consider an insurance market where the details of a new potential motor insurance customer can be queried in a centralized database to reveal a detailed claim history from past insurers, or a database that shows the cost of various drugs as captured by different insurers from their medical providers to be used as a basis for the market price? The benefit of such data would far outweigh the set up cost.

Every large business struggles to preserve business value and arrest any revenue leakage. Those charged with governance, in preserving shareholder value, must ask of their management, “For every business written in premiums, how much of it translates into claims and how much of that goes to claimant?”  Data analysis will enable insurance companies to review the value of written business against associated costs and implement relevant controls around key risk areas of revenue leakage.

The ability of an insurance company to anticipate claims has far reaching implications in ensuring proper pricing, accurate reporting on loss making contracts and increased efficiency in claims processing. By leveraging on data and analytics, insurers can assess the nature, probability and likely quantum of claims arising from written business.  This represents a potential quick win in curbing loss making contracts and better insights into the profitability of insurance companies.

The potential gains of data and analytics in the insurance sector will require commitment and investment by players in the industry. Insurance companies face a significant challenge in the collection of relevant data in a usable format. Use of data and analytics will introduce the need for more advanced business intelligence tools. Insurers will have to invest in the training of resources capable of correctly analysing, interpreting and applying the data.

This shifting landscape of data in insurance heralds the dawn of a new age of opportunity, innovation and differentiation whose impact will undoubtedly translate into gains for the insurer and insured.

Frank Mumo – Regional Financial Analyst, Jubilee Insurance

Innovation overhaul in General Insurance Companies long overdue.

The insurance industry both locally and across the globe is fast shifting with the disruption being primarily driven by innovation, technology and the use of predictive analytics. This changes have necessitated those in the insurance business to change tact and move towards personalizing customer interactions to match the emerging trends and meet their customer’s sophisticated requirements.

The General Insurance industry, particularly motor insurance in Kenya is witnessing tremendous changes. Statistics from the Insurance Regulatory Authority indicate that in the first quarter of 2017, premiums rose by 14.4% to Sh67.2 billion. Of the Sh67.2 billion collected in premiums in the first quarter of 2017, general business contributed 65.7% while long term business initiatives contributed 34.3%.
In an industry with many players and new entrants in the market, how then does one stay ahead? Forward thinking.. tech, rethinking the business models, new products, one size fits all approach will not work.. it needs to be tailored to the customer

Research has shown that 6 out of 10 people who look for insurance related material online, search for motor insurance, with 3 out of the 6 people purchasing a motor insurance cover online with an insurance company located in Kenya.
An agile and responsive organization will therefore seek to understand what their customers want and innovate continuously to ensure that they meet these needs. It’s all about convenience and by employing the right technology, they can take service delivery a step closer to the customers.

innovative and transformative in relation to how positioning themselves to be market leaders in future or at least cement there leadership positions.
For example, Jubilee Insurance launched a motor insurance app in 2016.
The app is designed to be used by agents to make quotes for customers and renew existing policies.
This takes service delivery one step closer to the customer in sense that customers don’t need to physically be present at our offices to get a quote or to renew insurance covers for their vehicles.
Data collected from the app by the company is used to streamline services and smoothen operations. This gives actuaries in the company a chance to deploy predictive analytics so as to know what the customers want, what they are most interested in and what they actually don’t need.

Live free at the speed of thought

In January 2017, we were formally introduced to our new Regional CEO Dr. Julius Kipng’etich and it was encouraging to feel the passion and new vision that I hope will be infused into all of us at Jubilee Insurance. What caught my attention was his focus on technology and its ability to drive business growth and efficiency.

During his speech, he fondly mentioned a book “Business at the speed of thought”, by Bill Gates and I got a hold of it and read the section on the “Digital” Nervous System, since it sounded so interesting. It soon became abundantly clear why insurers struggle with visibility and product uptake in Kenya. It all comes down to our use of technology and the agility of our I.T. infrastructure. The following three questions and the quote immediately below, formed my point of reflection.

The Questions:

1. Our IT systems – do they enable us spend most of our time analyzing information OR collecting it?

2. Do we use our servers as integration points for applications from the various systems …especially the much older ones?

3. Do we have a single platform to support applications for our and client use?

The Quote:

“A digital nervous system serves two primary purposes in the development of business understanding. It extends the individual’s analytical abilities the way machines extend physical capabilities, and it combines the abilities of individuals to create an institutional intelligence and a unified ability to act. To put it all together in the right context: A digital nervous system seeks to create corporate excellence out of individual excellence on behalf of the customer.

The more I think about it, it is clear that we have all the data that we need to double or even triple our Gross Written Premium based on our existing clients, but absolutely no information (intelligent, actionable and useful data points)! This silo mentality reminds me of the Vodafone SA TV advert (“We’ve been having it”J) which features an African president character who explains away all the new technology around him by stating that they’ve been having it all along.

Let us change the way we do stuff and embrace tech so that the data can get out of its “one and zero” cocoons and silos and transform into that beautiful information butterfly that will get Jubilee to soar high in the financial services sky. As Dr. K put it, it is time to leave our poor cousins and become the rich cousin in the financial services community, else become irrelevant and dieL.

Live Free!

Is your busy lifestyle inhibiting your wellness?

Our busy modern lifestyles are often at odds with our aspirations to achieve wellness through good nutrition and exercise. Convenience and limited time to exercise and prepare meals, or dislike of food preparation and cooking, shape many people’s lifestyles today. Time is an important factor whether we choose to prepare healthy meals, order take-away, pick fast foods or eat snacks instead of meals.

Due to the nature of our work, we sometimes end up skipping meals as our heads are deeply buried in the massive work-load, fighting to achieve set turnaround times and achieve our deliverables. Many of us just buy a snack, say a piece of chapati or mandazi, to eat with the 3 o’clock tea and that would be lunch.

And to the single young colleagues who live by themselves, cooking at home is so tasking that they resign to buy fast foods for supper. Some just have a cup of tea with two slices of bread, and go to bed. Unfortunately, there’s no proper breakfast to compensate for this. And the circle continues.

Eventually, you will find a group of unhealthy people, in the sense that they either do not eat healthy foods in preference for fast foods high in fat, sugar and calories. The other lot does not eat at all. Either condition coupled with lack of exercise, not getting enough sleep, stress and depression and lack of good social life, you end up with staff who are working hard to deliver but forget to take care of themselves.

So, we should all take a pause and look at ourselves holistically. Just like we take good care of our cars, ensuring we add fuel, some oil, water, check tire pressure and so on, our bodies do need proper care. Whatever we are chasing may end up being illusions we cannot attain if we are not in perfect health and physical condition. You can only deliver the best service if you are in perfect shape, right…

The technological disruptions that will shape the future of Insurance

The insurance industry has recorded minimal growth as far as penetration and performance is concerned. The growth has been slower in the developing markets where penetration has seen a sluggish appetite. The most sensible reason for this has been lack of trust between the customers and the insurance companies for starters and lack of adequate disposable income among the populace in many of these markets. The last decade has however seen a surge in insurance trends thanks to the advancement in technology. Industry experts say that in years to come, growth of the industry will primarily be fueled more by technology than by any other factor. While the changes and growth are not expected to be instantaneous, the winds of change are already sweeping through the industry, propelled by technology and innovation. It is expected that future insurance companies will be driven by technology 100 percent and all processes are expected to be automated. Companies that respond and adapt to this inevitable change stand to reap big while those that adopt a wait-and-see approach will cheer the first movers. There are some technological innovations that are expected to disrupt the industry going into the future and how this technology can be leveraged by insurance companies to make meaningful impact.

Artificial intelligence (AI)
AI is an umbrella term that is used to refer to four different classes of Artificial Intelligence namely Cognitive, Data Science, Computing and Machine Learning. AI is expected to play a fundamental role in helping underwriters unlock their potential in terms of value addition to their back and front office operations. Data science and machine learning, for instance, is expected to take center stage in implementing these processes because they are the most understood and the most used forms of AI. The advancement in AI and machine learning are already making it possible to leverage unstructured datasets and companies are already making use of this development. Companies like Zhong An, an online-only insurer in China has implemented AI in all their processes ranging from product pricing to consumer trends prediction. Companies are expected to make use of information such as credit histories and online usage trends of clients to come up with algorithms that would customize products for customers. But more value will be achieved by insurers that seek to make use of AI to improve and automate all backend processes to be seamless and error free because in this industry, perception is everything.

Blockchain and Chatbots
Blockchain technology is closely related to AI and Machine learning. Insurance distribution channels especially those directly related to micro-insurance products are expected to be modified and in some instances reengineered completely to adapt to the changing and emerging trends in technology. More and more companies have already adopted the USSD approach which is considered a low-touch approach in terms of consumer connectivity. While it has worked very well for most firms, the jury is still out on the viability of this channel as an ideal distribution channel especially in a market where trust in the industry is still an issue to be discussed. Other high touch channels such as agents and brokers are considered more viable because they provide a certain level of consumer understanding and trust, even if this may not always be the case. Chatbots create an important balance between these two channels and seem to bridge the gap between the tech-savvy consumers and the traditional consumers who still believe in a conversational approach to purchase insurance. Some industry players such as Spixii are already using chatbots to spice up their customer experience while at the same time offering seamless processes that are almost instantaneous. Companies such as Lemonade have already implemented their virtual assistants who are able to settle claims in a matter of seconds, the fastest being 3 seconds.

 

Peer-To-Peer
P2P insurance is a term used to describe products such as rotating savings and credit associations that normally group people into pools and then offer insurance. While this is not necessarily a new concept in the insurance industry, we expect to see companies leveraging on technologies such as social media and taking advantage of smartphone penetration to create new group structures. These groups will benefit from more transparent transactions, secure payment gateways and a more personalized connection. First movers in this space such as Friendsurance and So-Sure are already registering increased customer numbers and saving between 30-80 percent of their administrative finances.

On-Demand Insurance (ODI)
The current crop of consumers have varying consumer needs that insurers will have to adapt to. For instance, the new generation of consumers would prefer to buy items several times in small quantities as opposed to bulk buying periodically. This trend is mostly informed by the irregular income streams that intertwine with competing needs. The solution? “Sachet marketing”. Insurers will be compelled to come up with short-term products that require periodic or regular payment either weekly, daily or monthly. This means that insures will sell their products on-demand and will either turn a policy on or off depending on the consumer needs. As expected, first industry movers such as Kenya Orient’s “Safari Bima” are already enjoying the benefit of this kind of arrangement where consumers can purchase scratch cards or simply relay an SMS to activate their cover when they are ready to do so. As the smartphone penetration Index continues to rise, we expect that more and more firms will get innovative and introduce diverse micro insurance products for some of the low income consumers.

InsurTech
According to FinTech Weekly, InsureTech or Insurance Tech are Technologies & platforms that help optimize any of the principles for success or requirements of insurance. By extension: any company that provide insurance through the engagement of technology in a user-centric way. Insurtechs are here to stay and it is expected that they will define the insurance industry in a big way in the next decade. The developed markets have already recorded an upward of 46 percent increase in the number of InsureTechs entering the market every year. While the developing markets are yet to reach this number, the future is dotted with more and more Insurance Technology companies that will disrupt the industry fundamentally. This companies will offer better insurance services and processes that will entice customers to shift from the mainstream Insurance providers while at the same time riding on the backs of these insurance firms.

Conclusion
It is obvious that the future of insurance growth and penetration will be anchored on technology and its usefulness will depend on how well the players in the industry leverage this technology to suit their needs. The first movers in each and every step of the way will be the bakers of the cake while the rest will only benefit from their generosity.

We all need to embrace technology in doing business

To the point of writing this blog, I still wasn’t certain about what it is exactly I felt about this mystified idea that had quickly been turned into a reality by the Barcelonan based tech guru, Dr Sergi Santos. The features of this robot, which he loves to call Samantha, mainly artificial intelligence, are as stunning as they are startling. Its sense and response to touch, ability to communicate, (though minimally) as well as capacity to express emotion are all mindboggling steps by man in his attempt to realize the big dream of artificially creating one of their kind- a fully functional human.

The wake of the new millennium has seen a myriad of fascinating developments in every area of life. Its dawn marked the beginning of the end of several eras, some that have already been witnessed while others are fast approaching. When Bob Lutz, a veteran in the motor vehicle industry, said that people will be selling their currently cherished cars for scrap in less than a decade from now, a considerable percentage of modern day critics with a traditional mind-set quickly dismissed him without much thought and even dubbed him, ‘fantasist futurist’. With every new day, however, the auto-industry has continuously made new releases with a key emphasis on New Energy Vehicles (NEV). China is on the forefront in the fight against diesel and petrol powered vehicle engines as witnessed in their aggressive bans.

If a Japanese engineer isn’t busy brainstorming in the line of super-fast cozy New Energy Vehicles, he’s engrossed in making a robot chef. Sounds magic but it is already more than just an idea. The Huis Ten Bosch, an amusement park dedicated to drawing tourists, is among few commercial food places that have integrated robot services in their food preparation processes. Moley Robotics Company will be launching the world’s fully automated and integrated intelligent cooking robot in a decade. No. This year – 2018! It is projected that at the time of the launch, the robot will have the capacity to cook upwards of 100 different meals. The sweetest part of this invention is that the robot will clean itself.

Technology is not only changing the kitchen and the whole cooking experience but also the food cooked. Like other investors, Richard Branson and Bill Gates have pumped huge sums of money into Memphis meat, which is a company that focuses on making meat without animals. Numerous personal health benefits, increased animal welfare and massive environmental gains are among the cited factors that have driven these firms into synthetically replicating meat cells from plant-based products and are hopeful of great success.

Conversations about technology go on and on with businesses experiencing their own shake by the wave. In a recent post by Sunny Bindra, an avid reader and tech enthusiast, he explains that this might be the same year that an experiment to have intelligent bots offer customer service will be conducted. Of course, it is more advantageous compared to humans: Ease of saving large data, ability to store preferences, and free of external training and motivation costs. All these and more in 2018.

Live at the speed of thought

In January 2017, we were formally introduced to our new Regional CEO Dr. Julius Kipng’etich and it was encouraging to feel the passion and new vision that I hope will be infused into all of us at Jubilee Insurance. What caught my attention was his focus on technology and its ability to drive business growth and efficiency.

During his speech, he fondly mentioned a book “Business at the speed of thought”, by Bill Gates and I got a hold of it and read the section on the “Digital” Nervous System, since it sounded so interesting. It soon became abundantly clear why insurers struggle with visibility and product uptake in Kenya. It all comes down to our use of technology and the agility of our I.T. infrastructure. The following three questions and the quote immediately below, formed my point of reflection.

The Questions:

1. Our IT systems – do they enable us spend most of our time analyzing information OR collecting it?

2. Do we use our servers as integration points for applications from the various systems …especially the much older ones?

3. Do we have a single platform to support applications for our and client use?

The Quote:

“A digital nervous system serves two primary purposes in the development of business understanding. It extends the individual’s analytical abilities the way machines extend physical capabilities, and it combines the abilities of individuals to create an institutional intelligence and a unified ability to act. To put it all together in the right context: A digital nervous system seeks to create corporate excellence out of individual excellence on behalf of the customer.

The more I think about it, it is clear that we have all the data that we need to double or even triple our Gross Written Premium based on our existing clients, but absolutely no information (intelligent, actionable and useful data points)! This silo mentality reminds me of the Vodafone SA TV advert (“We’ve been having it”J) which features an African president character who explains away all the new technology around him by stating that they’ve been having it all along.

Let us change the way we do stuff and embrace tech so that the data can get out of its “one and zero” cocoons and silos and transform into that beautiful information butterfly that will get Jubilee to soar high in the financial services sky. As Dr. K put it, it is time to leave our poor cousins and become the rich cousin in the financial services community, else become irrelevant and dieL.

Live Free!

How an efficient customer service contributes to the bottom line

Very few customers will let a company know of their dissatisfaction after using their products or service. Others simply walk away and seek services from your competitors. Unfortunately, there are those who will share their bad experience with their friends, family, colleagues and so on. And in this era of social media, others will publish their frustrations online thereby fast-tracking the spread of the bad experience they had to other customers and potential clients. Therefore, good customer service is the backbone of an organization and companies should strive to offer the best experience possible to each customer it handles.

Customer service can be summed up simply as being prompt in relaying replies to queries, polite in our interactions with the customers, being professional with how we handle the complaints and adding a personal touch along with that experience.

The customer may not always be right, but he does pay your bills. Thus, companies need to do their best to provide the best customer service experience in order to retain them as clients and hold them back from being a spokesperson for your competitors. Offering a great customer service experience assists your company in the following ways:

Business Growth

By providing outstanding customer service you make more money. When they experience great service, your customers are able to build trust in your organization thus they easily become repeat customers. Your customer service representatives and employees need to be friendly. You can also issue discount coupons and thank-you notes which go a long way toward cementing lasting relationships.

Spend Less on Marketing

When your customers are satisfied they become your promoters and advocates. You in turn benefit by getting free, positive word-of-mouth marketing. This is considered the most effective and authentic form of brand-building.

Happy Customers Spend More

You need to focus on the quality that your support team offers, to ensure they make customers feel happy and valued, which will directly impact sales. Research shows a customer’s emotional experience during their interaction with your company affects how much they are willing to spend.

Company Reputation

A good reputation could be the difference between an average business and a very successful one. Bad news travels fast and far, and is remembered more than good news. In fact, twice the people hear about a bad customer service experience than a good one. Therefore, you are better off taking time to address the issues that your customers have, because this will enhance your company’s reputation thereby leading to more customers in the future.

Kenya

The Jubilee Insurance Company Limited was incorporated in 1937 as a composite insurer and provider of mortgage finance, based in Mombasa. In the years that followed, Jubilee spread its sphere of influence throughout East Africa, and opened branches in Dar-es-Salaam, Kampala, Bombay, Karachi, Mauritius and Zanzibar.