The digital behemoth is set to revolutionise shopping in South Africa. Will there still be space for insurers and intermediaries?
Lockdown enforced a rise in online shopping and is no doubt a precursor to the e-commerce lifestyle set to take over SA given the impending arrival of Amazon.
In this way, Covid-19 inadvertently prepared South Africa for Amazon’s digital realm of business, and the insurance industry made the shift from in-person consulting to digital interactions with clients with impressive ease.
In The Deep End
“We moved literally overnight from being a national brick-and-mortar office network to a remote virtual network,” says Peter Olyott, CEO of Indwe Risk Service. “We immediately saw the need to provide all staff with elementary training dealing with the virtual world. This involved some basics such as managing in a remote environment to presenting and coming across in a virtual environment, negotiating and the like. “
“We were able to borrow technology from elsewhere in the company and now intermediaries and their clients are able to conclude the sale of policies or the issuing of an investment in a secure and remote environment,” Kobus Wentzel Executive Head of 1Life Distribution says.
“With 1Life Vantage, the entire sales and servicing process was already a digital experience and all we had to do was incorporate one-time pin functionality and electronic signature functionality into Vantage in order to enable our financial advisers and clients to finalise the issue of a policy.”
“Clients no longer expect us to fly all over the world just for an hour-long meeting,” Kali Bagary, CEO of The Data Company explains. “We’ve been able to successfully develop entire software applications for our clients completely remotely with teams spread across three continents.”
Delivery Dilemmas
The arrival of Amazon will bring an increase in complex logistics, from delivery services to inter- warehouse transport.
“As logistics gets more complex and niche per use case, the insurance required will have to take that into account and be able to deliver niche products to cover the different requirements of each use case within logistics,” says Barry Dickson, Chief Technology Officer of Lombard Insurance.
This will impact home contents and commercial insurance in South Africa, explains Kali Bagary of The Data Company.
“For home contents policies, insurers will be able to provide replacement products more quickly and easily by using the online services created by the likes of Amazon. Damaged TVs, for instance, could be replaced within hours of a claim being filed.”
And there will be a significant effect on commercial insurance, Bagary adds. “Amazon has introduced a fleet of electric delivery vans which has helped to prove the viability of electric vehicles for commercial fleets. We believe this will further drive the ultimate fulfilment, but with heavy tracking and routing tools to monitor and report to customers.”
Naturally, with more wheels on the road, there will be more data to monitor and streamline the journeys.
“Telematics insurance products will grow to be able to track delivery vehicles, distances they are travelling and patterns in driving behaviour,” Bagary mentions.
Lockdown has given us a preview of this landscape as Peter Olyott of Indwe explains.
“With the sudden upswing in online retail, it has been evident that there has been an increase in demand for the so-called ‘last mile’ delivery. In a large number of cases, this involves private citizens using their own vehicles as independent contractors to deliver on behalf of the online retailers – whether these be household goods, clothing, groceries or foodstuffs. How many of these individuals have insured their vehicles correctly is unknown and one can almost anticipate problems of vehicle usage coming into the equation when a loss occurs.
“There is a fair amount of potential legal complexity to further muddy the waters of corporate representation – are they truly independent contractors or differently employed employees? I believe Uber has been experiencing these legal challenges globally in certain jurisdictions.”
But at the same time, this could mean less vehicles on the road.
“Vehicle usage will also reduce further where online retail takes hold as one no longer has to go to the mall to spend a few hours to go shopping, when one can do this from the comfort and safety of one’s home,” Olyott adds.
Enter The White Label
In Europe, Amazon ensures certain products with the white label Amazon Protect. Could this ‘white label approach’ – whereby Amazon rebrands other insurer’s services to make it appear as if it’s their own – work in South Africa?
It works at 1Life, says Kobus Wentzel.
“We prefer to utilise white labelling, where the white labelled solution is of such a standard that it can simply be added into our own infrastructure as plug-and-play. In this way we broaden our digital ecosystem at speed and we have less trial and error.”
Kali Bagary sees this in a positive light. “This could be a win-win opportunity as the carrier gets exposure to the Amazon ecosystem.”
There is some reputational concern though, mentions Craig Olivier, co-CEO of Genasys. “Amazon has proved it works but I think the challenge now comes around as what brand is seen behind that insurance cover and then the potential revenue benefits of the insurer,” he says.
“If they’re actually getting their licence and they can control that, I think they’re going to be in a much better position to offer insurance as part of the check-out process,” Olivier adds.
“The introduction of the Micro-Insurance Act will serve to make this trend more attractive especially to traditional non-insurance businesses,so we foresee tremendous growth in this area,” Peter Olyott points out.
Speedbumps And Setbacks
Amazon has invested aggressively in the payments experience to make it as frictionless for clients as possible. But is this possible in South Africa, where things like proof of address have always been the bane of any bureaucratic procedure?
“The complexity in onboarding of a client always depends on how much information you need at the start versus how much information you can collect through the journey with the client. In SA we generally need to FICA or RICA a client which requires automation. In the B2B space we have complexity in understanding the company’s financial position, their cash flow, credit status, etc.,” says Barry Dickson, Chief Technology Officer of Lombard Insurance.
1Life’s approach to streamlining bureaucracy starts with the onboarding of the financial adviser, says Kobus Wentzel.
“It can be a very lengthy process with many forms to be completed. With 1Life we require only a one- page onboarding form: easy and very fast.”
“From a client perspective, they need a valid ID which for some people has become a real issue, due to backlogs related to Covid lockdowns,” he continues.
“You also need to FICA, so have proof of a South African address and bank account. This then also leads to information in order to complete a debit order.”
As far as overcoming these obstacles goes, Wentzel mentions two solutions that 1Life employs.
“Our claims systems are linked to the Dept of Home Affairs systems, which enables us to obtain a death certificate in the case of a funeral or life policy claim directly,” he says.
“With regards to the debit order system, 1Life offers Debicheck; a type of debit order where the client gets to confirm and approve their new debit orders, electronically on a once-off basis at the start of your new contract before it is processed off to their bank. Many companies or service providers have chosen to go the DebiCheck route and will continue to do so over time.”
And so to make this easier, in tech we trust.
“It all comes to automation and integration of different services to cut through the red tape,” say Barry Dickson, their Chief Technology Officer.
Are We Still Relevant?
Despite Amazon’s emphasis on no brick-and- mortar shops and no middleman, insurance thrives on human relationships. In the age of faceless purchasing, insurers insist that these interactions are essential.
“Amazon has generally fulfilled a known aspiration, at a fair price with good fulfilment,” Kali Bagary of The Data Company says. “In insurance, one is starting further back in the emotional purchase: What do I want? Why do I want it? What is the best solution? Human relationships help inform this ultimate buying decision. Technology will have an increasing role in helping consumers make these decisions in the future but as yet have not solved the problem of getting someone to buy something they don’t know they need or are not confident about what they need.”
And they’re not entirely online, Bagary points out.
“It is also important to note that Amazon is experimenting with physical stores, with the first one opening in Bluewater Shopping Centre in Kent, England. Amazon also own Whole Foods which has physical stores with no cashier tills.”
“We don’t believe that we will ever get to a point where human interaction is completely removed from the process. Virtual helpers and digital solutions can definitely provide significant support when it comes to administration and the day-to-day burden of a host of automated, predetermined tasks,” Kobus Wentzel says.
However, when it comes to more intricate underwriting, claims processing or advice- giving processes the human touch is still vital and of course that is where the financial adviser comes into the mix.
“We fully believe that personal interaction is where you bring the intelligence the data has shown and combine it with the power of the human underwriter to make the right, informed decision and thus inform the right purchase,” says Barry Dickson.
“Personal relationships remain important because of the way human intelligence is wired,” Olyott says. Whilst I believe technology has a key role to play even in personal human interaction ( such as having access to the records of past conversations, likes and dislikes etc), it is ultimately the ability to generate trust which forms the basis of how we form relationships.”