Embrace technology, insurance industry urged

HARARE - Zimbabwe's troubled insurance sector has been urged to embrace digital transformation and use data insights to reduce fraud and increase penetration rate.

The country’s insurance industry is still reeling from hyperinflation, which happened a decade ago and wiped out people’s savings resulting in a low penetration rate.

In the past few years, the industry has also struggled with increasing cases of fraud that include fictitious car accident or death claims, exaggerated claims and backdating of insurance claims.

Blessmore Kazengura, the acting Commissioner of Insurance, Pension and Provident Funds, said technology such as blockchain could help to instil confidence in the troubled sector, which has remained trapped in the past.

“The truth is that we cannot ignore the wave of technological change and assume that the local insurance industry will remain a virtual island in a sea of technological change.

“Insurance is an international business that transcends boundaries, hence the need to be on the watch-out regarding developments in the international markets,” he told delegates attending a breakfast meeting last Friday.

With the youths making more than 60 percent of the world’s population there has been a major shift in client demographics, behaviours and expectations.

Kazengura said agile insurance players have observed the shift in population demographics and consumer tastes and have leveraged technology to create new insurance products, services and business models that are tailored to the demanding needs of growing digital customers.

“Technology is changing business models in both positive and disruptive manner. It is, therefore, imperative that we stay as relevant as possible for our continued existence and development of the sector. In fact, we should be first followers of those insurance markets that have become first movers in terms of technological innovation in insurance delivery,” he said.

The IPEC boss said his organisation was supportive of innovation among its players since it is good for competition and insurance inclusion.

“As you may be aware, the local insurance penetration, which is around 4,7 percent is on the low side given the potential impact of digitisation in increasing insurance penetration.  One interesting fact to note is that Bitcoin has overtaken insurance penetration in many African markets.

“For instance, in Nigeria, the penetration of Bitcoin is at  three percent against insurance’s one percent. This is despite the fact that there are no brokers and agents for cryptocurrency and consumer protection laws in place.

“Therefore, the uptake of Bitcoin demystifies the perception that there is no market for insurance in Africa and Zimbabwe in particular. Thus, the low penetration of insurance can thus be tackled through digitisation,” he added.

New Finance minister Mthuli Ncube concurred with Kazengura and said it was important for regulators to embrace and encourage technology and innovation. — The Financial Gazette

 

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