This commentary has been kindly provided by Dr Dipankar Acharya, MBA; FIII; PhD, who is the Chief Executive Officer at APA Insurance, a long-standing member of the Association. Dr Acharya will be presenting on this subject at our next meeting on 29th January 2025. This is a commentary and comments are welcome by email to info@eaa.co.ke
This commentary has been kindly provided by Dr Dipankar Acharya, MBA; FIII; PhD, who is the Chief Executive Officer at APA Insurance, a long-standing member of the Association. Dr Acharya will be presenting on this subject at our next meeting on 29th January 2025.
The Association welcomes input from members for the commentary section of the newsletter – if any member is interested in doing this please contact, Nikhil Hira (nrh@eaa.co.ke), Executive Regional Director, East Africa.
DIGITAL TRANSFORMATION IN INSURANCE
Implementing digitalisation has become inevitable and rather indispensable in all industrial setups now, the insurance industry being no exception. Digital transformation is no longer optional, it’s essential and inevitable. No organisation can enhance innovation and efficiency without embracing this new technology. The phenomenon is reshaping the insurance sector too. It is fundamentally changing how businesses operate and services are delivered by blending traditional practices with modern technologies.
This shift involves the adoption of digital tools and platforms to improve efficiency, accessibility, and personalisation, empowering insurers to meet the evolving needs of a dynamic and expanding market. In fact, the impact of digital transformation spans the entire insurance value chain, delivering both tangible and intangible benefits. This has resulted in improvement in many spheres including reduction of cost, enhanced customer experiences, faster time-to-market, augmented sales productivity, and has brought more efficiency in underwriting and claims processes.
Digital disruption is reshaping the insurance industry, offering transformative benefits across key areas. On the one hand, by streamlining processes the insurers achieve greater efficiency and accuracy, while the digital tools enhance customer experiences through personalised, accessible services on the other.
Advanced analytics help improve fraud detection and risk management, reduce vulnerabilities and safeguard resources. Automation and data-driven decisions also lead to significant cost reductions, essential in our price-sensitive market. Furthermore, adopting digital solutions provides insurers with a competitive edge, enabling them to stay ahead in a rapidly evolving landscape.
The Impact of Digitalisation on the Insurance Value Chain is reshaping every aspect of Kenya’s, and indeed the region’ s, insurance value chain, bringing transformative changes to how insurers interact with customers and manage operations.
Product Development: Insurance solutions are becoming increasingly data-driven, allowing insurers to develop products tailored to local needs. For instance, health insurance products are now considering the unique challenges of providing quality care in rural and urban areas and offering the same level of service through the digital medium.
Product Distribution: With mobile penetration exceeding 90%, insurers are leveraging mobile platforms to reach underserved markets. Customers can now purchase policies, pay premiums, and file claims directly from their phones, removing traditional barriers impeding speedy resolutions.
Claims Management: Claims, once a lengthy and opaque process, have been streamlined using digital tools such as AI-powered assessment systems and mobile photo uploads for damage/claim verification. These innovations build trust and improve customer satisfaction.
Customer Engagement: CRM systems and social media platforms allow insurers to maintain continuous, personalised interactions with policyholders, fostering loyalty and trust in a competitive market.
By creating and facilitating regulatory sandboxes, regulators enable insurers and Insure-tech startups to test innovative solutions in a controlled environment. This encourages experimentation and creativity while mitigating potential risks.
Finally, driving innovation through regulatory frameworks is crucial. Policies that support the adoption of emerging technologies like block chain and IoT would help insurers deliver better products and services, strengthening the sector’s resilience and competitiveness.
Digital transformation is not merely an opportunity for the insurance sector, it is a necessity. By adopting digital technology, insurers are able to address long-standing challenges like low penetration, lack of trust with customers and provide tailored solutions that meet the needs of customers.
Leveraging innovation to enhance efficiency and prioritising customer-centric solutions could position the region as a global benchmark for digital innovation in insurance. Together, the industry, regulators and other stakeholders can re-imagine insurance as a driver of growth and resilience in the country’s economy.
Dr Acharya can be contacted at dipankar.acharya@apainsurance.org.
This is a commentary and comments are welcome by email to: info@eaa.co.ke