Solve 3 fundamental challenges to growing insurance sales in Africa

How to Solve 3 Fundamental Challenges to Growing Insurance Sales in Africa

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An agent works hard to win a client’s trust and provide them with the right life insurance solution. At that point shouldn’t the hardest part of making a sale be over? Unfortunately, that’s often not the case. The policy application process itself can be more onerous than the discovery and sales meetings that preceded it. In many cases (for non-guaranteed products) the time it takes to make a decision on that application can be frustratingly long. Days or even weeks.

A slow and opaque on-boarding process creates a poor customer experience – which is especially harmful since it is the client’s first, and probably lasting, impression. Agents feel they are in the dark and sometimes powerless to help. Sales are slowed at the insurer level. And the independent insurance distributors are caught in the middle.

Research that reveals the truth about African distribution from insurers, brokers and banks

To understand the realities of the distribution situation in Africa Equisoft commissioned Cenfri to conduct an in-depth 360°research study to provide data on how long policy onboarding actually takes and the reasons for those timelines. In order to obtain a true panoramic view of agency issues in EMEA Cenfri conducted qualitative and quantitative research with insurers, brokers and banks.

Time to issuance is product dependent

The survey results showed that policy decisions can be made pretty quickly in most cases‒largely because, in Africa, there’s a very strong bias towards very simple, guaranteed products. We found that 60% of both underwriters and brokers could process new business within 48 hours and another 30% would take just a few days.

However, on the underwritten product side, approvals can take a lot longer. Once of the insurers interviewed indicated that it could take up to as long as three months.

Reasons why time to issue is so long:

Challenge #1: Digitalization is lagging

One of the big impediments to accelerating issuance is the low level of digitalization amongst both insurers and distributors. This technological shortfall exists throughout the policy value chain‒from the tools used to make sales to underwriting solutions and on to the management of the policy throughout its duration.

It was quite notable that the lack of digitalization was a bigger problem amongst insurers than it was amongst banks and brokers. They tend to have very old systems and quite often multiple systems. A few respondents had as many as 10 policy administration systems and that adds a huge amount of complexity to one's business.

‒ Nigel Bowman, Associate to Cenfri

In the absence of integrated, digital tools which use APIs to pass data down the workflow, policy onboarding processes are slowed by manual steps, paper and human error. Lack of modern platforms causes lags in decision-making at the insurers, but it also impacts distribution partners and end-customers.

Banks and brokers are challenged to track, report on and manage business as it is submitted and moves through often antiquated systems and processes.

Challenge #2: Digital literacy holds back modernization

It is difficult to advance digital transformation in African insurance since many potential customers are still living in a flip phone paradigm and many agents are still carrying briefcases full of paper forms to be completed if a potential client agrees to buy.

When it comes to automation, the level of literacy amongst consumers is a key problem. If many consumers are not literate enough to be able to interact with the platform that insurers put at their disposal, then we are set back to zero. The first challenge is literacy amongst the consumers. And literacy is not just about being able to read and write, but also be able to interact on these computer platforms and mobile apps. It is essential. What percentage of the population in Africa actively play on these platforms? That is a key consideration.

‒Shaibu Ali, Managing Director, KEK Insurance Brokers

In some regions around the world the primary concern is that consumers are more digital than the insurance companies‒who are struggling to catch up and provide the modern online experiences customers expect. In Africa, in many places the problem is turned inside out‒digitalization is not a priority if your potential customers are living largely analog lives.

We need to push on with automation. People are going to become a lot more savvy with technology and the younger generation is going to replace the generation that is not very literate with computers and technology. And so the future looks bright.

‒Shaibu Ali, Managing Director, KEK Insurance Brokers

Challenge #3: Consumer trust is low and hard to build with online solutions

The Cenfri research showed that there is a strong desire to digitalize sales channels, using solutions like WhatsApp and integrated illustration, eApplication and portals. However, all stakeholders are struggling with the reality that consumer trust in insurers is low, and trust is a very difficult thing to build in an online setting. Insurers realize that a lot of work needs to be done to bridge that trust gap. Effort needs to be put into educating consumers, demonstrating that insurers will reliably and quickly pay claims and becoming more responsive to service requests. It is likely that a hybrid sales model will emerge that combines the ease of digital with the agents ability to build confidence.

Wrap up

Clearly, taking weeks or months to approve non-guaranteed policy applications can’t continue. The challenge for African insurers, brokers and banks is to overcome the legacy technology, trust and consumer tech literacy issues that are holding back the acceleration of policy on-boarding. This will, in part, require the modernization and digitalization of many systems for each stakeholder.

New policy administration and agency management system, married with integrated, digital sales and service solutions will create a foundation for sales acceleration. And, increased automation will create new efficiencies for carriers, broker and banks. Commission accounting will be streamlined. Agent and Client satisfaction will be enhanced. Those organizations that recognize the opportunity and act now will see the biggest spur to growth as their transformations take effect.

To find out more about how insurers, brokers and banks can solve the fundamental challenges facing African insurance watch the webcast.

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