According to an article publishes by Citywire, South African insurance companies are increasingly using technological advances and better digital platforms to personalise their client experiences, according to Discovery Insure CEO Robert Attwell.
‘This drive has been seen in various insurance mobile app enhancements and the ability for clients to interact and change their insurance policies,’ Attwell told Citywire South Africa. ‘A fair number of insurers are likely looking to incorporate artificial intelligence [AI] into their business processes.’
Given the pace of change in the insurance sector, advisers should keep up to date with the latest innovative offerings by both traditional and startup insurers to ensure their clients have the best risk management possible.
How the insurance sector uses AI
Insurance technology – known as ‘insurtech’ – is the use of innovative technologies to optimise, modernise and automate insurance.
According to insurance disruptor firm Pineapple (FSP 48650), these solutions have disrupted the traditional insurance sector by introducing new products, services and business models to clients. Their accessibility and efficiency have allowed previously underserved communities to access insurance for their products.
Insurtech allows for more customised and affordable policies, more accurate risk assessment, faster quote creation and claims processing, and potentially lower premiums for some policyholders, said Pineapple, which is underwritten by Old Mutual Alternative Risk Transfer Insure.
Insurtech specifically uses the following, according to Pineapple:
- AI to better assess client risk, detect fraud and automate routine tasks;
- the internet of things, which allows the collective network of connected devices (eg, smartwatches) to work together to generate real-time data to monitor risk and offer tailor-made insurance products;
- blockchain technology to improve trust between insurance providers and clients, reduce transaction expenses and improve data security standards;
- data analytics, which allows insurtechs to use data to gain insights into customer behaviour, spot trends, assess pricing and refine risk assessment; and
- telematics (in the context of motor insurance, for example), which considers a driver’s use of their car (eg, average distance driven and driving behaviour) to determine a fair premium based on the driver’s risk profile, as opposed to using rigid factors like age, location and insurance history.
Insurers are also using data-driven solutions to manage climate risks. At the same time, ‘vast data sets’ and AI-driven insights allow car and home insurers to better understand the likelihood of extreme weather events and create responsive and resilient underwriting policies, according to a press release citing Funeka Ngewu, executive head of claims and procurement at Momentum Insure.
AI tools are also lending themselves to automated fraud detection in claims, predictive analytics and pattern recognition methods, according to an internal article by CMS South Africa director and head of corporate investigations Zaakir Mohamed and candidate attorney Prescious Mogale.
This reduces the financial impact of fraud on businesses and policyholders.
On the flipside, AI-powered deepfake technology can be used to create fake identities to make false insurance claims. And machine learning algorithms can exaggerate the damages suffered by an insured client by manipulating images and documents.
Mohamed and Mogale believe that, with the growth of AI, insurers must develop innovative and effective fraud prevention measures.
Local insurers are embracing tech
Attwell said Discovery Insure has a dedicated team to implement and integrate AI as part of its core business across the entire value chain, from underwriting to servicing and claims.
‘We see AI becoming a part of the culture, augmenting our current capabilities and helping teams become more productive,’ he said, adding that AI was an augmentative technology, not a replacement for existing functions.
Earlier this year, competitor Old Mutual said it was developing AI-powered tools to personalise client experiences and optimise its operations. It was also creating an AI-driven culture that encouraged experimentation and continuous learning.
Warnings for insurers
Pineapple sees the continued growth of insurtech leading to more innovation and responsive and adaptable insurance. However, it warns that ‘rigid regulations and the uncharted nature of newer insurtech methods’ have slowed the pace of insurtech growth.
Attwell warned that, with the increasing use of AI in the insurance industry, companies need to fully safeguard client information and privacy.
‘As more data is collected to use in greater personalisation, the risks of data leaks become more prominent,’ he said. ‘We expect more regulation and clarity on existing regulation to evolve into 2025 along with data protection guidelines and other personal information protection guidelines.’
