Why adoption of technologies would provide digital solutions for insurance penetration – NAICOM

In recent times, digital technology is massively affecting, changing and improving the way things are done. It is disrupting traditional operating structures and Industries such as telecommunications, media, entertainment and consumer products been impacted in such a way to attract and retain customers.

This topical issue was the subject of a paper presented by Mr. Ibrahim A. Ngaski at a recent workshop organised by the National Insurance Commission (NAICOM)for insurance and pension journalists in Uyo and with the title: ‘’Leveraging technology to promote insurance penetration.’’

According to Ngaski, ‘’the Insurance Industry is currently lagging behind and needs to accordingly change its business model, by re-evaluate their strategy and make the digital agenda a high priority. It’s time for Insurers to evolve and respond to these changes in order to meet up with customers’ expectations; and that requires a different set of skills, culture and operating model.

‘’In the past few years, we must have seen the emergence of core technology trends that are affecting nearly every industry. A multitude of technological advancements and shifts are reshaping the way we access products and services and or how they are delivered to customers.’’

Consequently, Mr. Ngaski argued that the adoption of technologies would help in providing digital solutions for increased insurance penetration. Examples are Cloud computing – Cloud computing enables the delivery of various services over the internet, Data Management and its flexibility.

Mobile technology – method use in communicating and marketing varieties of goods and services across different customers timely, thereby bringing services nearer to them which increases customer experiences.

Internet of things(IoT) – This is referred to as the internetworking of physical devices, vehicles, buildings and other items (also referred to as “connected devices” and “smart devices”), embedded with electronics, software, sensors, actuators, and network connectivity that enable these objects to collect and exchange data.

It is a network of smart devices connected to the internet. Insurers are increasingly leveraging the Internet of Things for various purposes, including identification of customers’ needs and risks. This is achieved by wearables to monitor our health and smart devices in cars and consumer products in houses. They are used to collect, share, interact with and analyse data.

NAICOM as part of its efforts to entrench use of technology in the insurance industry has also issued Insurance Web Aggregators operational guidelines. A web aggregator is defined in the guidelines as a company registered under the Companies and Allied Matters Act No 3 of 2020 (CAMA) approved by NAICOM.

The aggregator maintains/owns a website and avails information about competitive insurance products, prices, feature comparisons, and direct leads to the insurers. They provide information to prospective insurance consumers through a website that compares various products, prices, and coverage. They generally do not provide any consultative role, product endorsements, or ratings of insurance products.

To drive scale, insurers have begun to use a wide range of alternative distribution channels, often coupled with or facilitated by the adoption of technological innovations. As a result, the sector has achieved significant growth over the last decade, and a number of models have been quite successful.

To drive scale, Nigeria insurers have begun to use a wide range of alternative distribution channels, often coupled with or facilitated by the adoption of technological innovations. As a result, the sector has achieved significant growth over the last decade, and a number of models have been quite successful.

Technological advances, particularly the rapid proliferation of internet and mobile network availability, have born new ways to facilitate and improve client access e.g., enrolment, premium collection, renewal, claims handling, and client communication.

BIMA MICROINSURER: This involves distribution of micro insurance through mobile operators. They operate where mobile telephony is high and insurance coverage is very low by providing insurance through mobile subscription. Provides pay as you go insurance and mobile health services mainly to people living on less than $10 a day.

Policyholders register using their handset to fill in some basic identification details which process takes approximately 2 minutes. Premium payment is collected via automatic deduction of prepaid airtime credit. To claim, policyholders call customer support that will help them to file their claim which is paid in cash within 72 hours of the claim being completed.

BIMA LAB: The National Insurance Commission of Nigeria (NAICOM) has recently partnered with FSD Africa 2022 to launch the BimaLab Insurtech initiative in Nigeria, which will allow for the implementation of ideas for improving insurance in the country. BimaLab Nigeria aims to close insurance market gaps by educating, nurturing, and promoting innovations and Insurtech start-ups.

The innovators were selected to participate in the ten-week programme that provide them with the expertise, resources and support to develop and scale market-ready solutions that bring social and or commercial value to Nigeria’s Insurance sector by bringing creative ideas to the table.

‘‘Insurance companies can maintain a competitive edge by automating, improving and optimizing their business processes without compromising efficiency, quality, and response time. This will enhance employee productivity, speed-up processes, raise customer service levels, improve customer experiences, reduce operational expenses and increase operational efficiency.

”There is an urgent need for the Insurance Industry to adopt technologies to provide digital solutions. When this is done it will improve access to insurance by Providing Digital channels of distribution, Enhancing Easier access to Insurance products and coverage, Speedy issuance of coverage and claims payment and provides Innovative products to their customers.

‘‘Data is the most important ingredient of the digital age and it can be used massively for decision making across the insurance value chain and ecosystem and product development. We can gather data from customer’s information, Telematics devices, Smart phones, Social media, CCTV footage, Credit reports, Website analytics, Government statistic, Satellite data, Call Centers etc.

‘’Data Analytics helps companies in Customer acquisition and retention, Personalized Service and Pricing, Risk assessment, Cost cutting, Usage based Product Development, 360-degree Customer profiles, Improving Customer satisfaction, Faster claims settlement, process Automation, Customized Policy offerings, Call Centre Optimization

‘‘The push into the digital age also brings with it a host of new challenges for companies. Key among these challenges is the Cyber Risk and security, Privacy and Data Security. IT Infrastructure, Applications and databases should be protected against cyber-attacks.

Mobile devices, smart gadgets, applications dependent on the internet should be protected against identity theft, misuse of information, cyber-attacks & security breaches as hackers are constantly finding new targets and refining the tools they use to breach systems. Every insurer is expected to find a balance between innovation and cyber and information security.’’

However, the technological transformation of NAICOM as a regulator also include, but is not limited to the followings: Insurance Policy System; Licensing System; Complaints Management System; Financial Analysis System; Regulatory Sandbox, Web Aggregator; Insurtech; NAICOM USSD project, etc.