LISTEN NOW: Exploring the Impact of COVID-19 on Livelihoods in Africa Part 3 – The Effect on Digitisation in the Insurance Sector

The COVID-19 pandemic has amplified the importance of the insurance sectors’ role in development, and in the economic resilience of businesses and individuals. As of April 9, a third of the global population was in lockdown to slow the spread of the virus. Lockdown restrictions across the world have led to insurers across the continent working remotely.

Regulators in many countries are similarly being required to supervise remotely in many countries. Some have seen forced digitisation due to Covid-19 as a major opportunity to drive public-sector and economic innovation as consumers are required to interact with service providers through digital channels, thereby shifting behaviour. This webinar discusses whether the Covid-19 crisis can truly shift the way in which insurance is sold and engaged with on the continent over the long term. This webinar was moderated by Jeremy Gray and feature the following panelists: Elias Omondi, Insurance Regulatory Authority Kenya; Craig Thorburn, World Bank; and Pravin Kalpage, Hollard.

Previous disasters have shown that sales of insurance can increase where insurers have acted appropriately and continued to pay claims. Pioneer in the Phillipines is an example of this, they dealt well with claims and they saw an increase in premiums purchased after the typhoon, and are now the number one insurer in that market. Disasters make us more aware of the issues and our vulnerability, which leads to desire to purchase insurance.

The pandemic has brought challenges to insurance providers. Pravin outlined how they transitioned to having staff working from home wherever possible and for some areas such as product development and pricing, marketing and broker engagement this has been smooth. He attributes that utilising the cloud and software such as Microsoft 365 to helping the transition and the familiarity with and use of social media. Cyber security is an issue which requires monitoring and investment with staff working from home. It is more challenging for sales and claims. Sales has traditionally been conducted face-to-face (a challenge across the continent) through brokers and agents and claims has a larger reliance on physical paperwork and inspections. He feels regulatory changes such as acceptance of digital signatures, along with the use of technology including AI and drones can help with selling and processing of claims digitally. Zimbabwe has shown the mass market uptake of insurance via the use of mobile money, Econet have sold 3 million policies digitally.

It is not just the insurance providers working from home, insurance regulators are also moving to working from home models. Elias outlined the transition required to allow staff to safely access platforms and systems with cybersecurity measures in place, and also the change to work schedules and practices that have been implemented in Kenya. The engagement with and oversight of insurance providers has moved to being digital and inspections are being done virtually and an Innovation Hub established to broaden the ways providers can enter the insurance sector.

Craig outlined how globally regulators are reacting and implementing changes such policy initiatives for the acceptance of e-KYC and digital signatures, flexing reporting requirements, virtual inspections and deferring policy initiatives which are not essential and ensuring good market conduct and that customers are treated fairly. Longer-term approaches to be taken can include pandemic risk pools which can allow for more innovation for provision (pandemics are often insurance exclusions) and this should particularly be for microinsurance and for small business coverage; and changes in the data protection laws to allow digital acceptance of insurance policy documents and acceptance of terms and conditions. This will also allow the ability to sell insurance via mobile phones.