What's Happening?

The rise in online insurance – Risks, cover and considerations



While online retail is certainly not new, the recent pandemic has catalysed a massive surge in online business transactions. Peter Olyott, CEO of Indwe Risk Services, talks about how the face of commerce – and e-commerce – has changed, and what it could mean for “e-insurance”.

e-Commerce has been practiced in South Africa for some time, but it remained a fairly modest market dominated by leaders like Takealot and NetFlorist. Only in 2020, when forced into it, did we begin to accept a world where ordering groceries, household items and even medicine online is normal, safe and, as it turns out, convenient. The streets, largely empty during stringent lockdowns, buzzed with delivery bikes.

Although we’re now free to shop as we please, the delivery bikes haven’t gone away. Online shopping is clearly here to stay. And yet, the insurance industry is somewhat lagging behind on this trend, particularly on non-life solutions. Considering the impact that customer experience has on conversions (84% say that CX is imperative to buying decisions, according to a global Salesforce study), combined with the average consumer’s preference for online shopping and banking, the insurance industry simply has to catch up. 

To support this, a recent survey of more than 25,000 consumers across 22 countries uncovered that 49% of consumers are inclined to switch to brands that offer online product advisory and an experience that enables seamless, digital transactions.

Benefits to the buyer: Implementing technology into insurance

It’s not as if online selling is totally unfamiliar in the finance and services sectors. South African banks have been doing it – remarkably well – for years, even pre-Covid. Telecommunications companies have provided services, contracts and products via digital channels for decades.

The driving factors that make e-commerce so appealing are time, convenience, and being able to ‘do it yourself’. Technology can help fast-track the administrative process, availing more time to discuss needs and solutions thoroughly. It also facilitates access to personal portfolios, records wider subject matter expertise and promotes clearer decision-making.

Historically, insurance has occurred via phone or email. With advances in technology insurance transactions can now occur ‘face-to-face’ online, which is a more efficient and convenient experience.

Usage-based insurance is also more relevant than ever, allowing consumers to save money through clever digitisation. From the ‘old days’ of annual and monthly policies, this move takes us towards time-based coverage, whether for a day, a few days or a fortnight.

The risks of “taking insurance sales online”

Online shopping in any industry introduces an element of cyber risk and fraud. South Africa considered itself immune to cybercrime, with most headline-grabbing events occurring outside our borders – until the notorious TransUnion breach, and the well-publicized Dischem incident which followed soon after.

IBM’s Cost of Data Breach Report 2021 warned of this, revealing that South Africa is the second-highest target for cybercrime in the world and that the pandemic has ramped up these risks significantly. These risks apply to any business transacting or operating online, including insurance providers.

With e-commerce transactions at an all-time high, there is now more personal data online than ever before. The increase in remote working also means that more companies are facilitating at-home workstations, which impacts organisational cybersecurity measures, while consumers’ lives are becoming increasingly dependent on their devices, whether mobile phones, laptops or desktops.

Online insurance isn’t a threat

Insurance is not bought. It’s sold.

It’s perceived as a ‘grudge’ purchase and not something that your average consumer rushes out to buy. That’s why implementing technology and e-commerce in insurance should not be seen as a threat to the brokerage industry, but rather as an aide to growing business.

Through technology brokers can access customer insights, fast reporting, trends analysis, and more, driving sound decision-making, based on facts. It also typically enables better record-keeping. This means online insurance could change the landscape of compliance with FSCA regulations, and diminish the manual labour involved in compliance reviews.

By automating processes and allowing your customer a degree of control over their insurance portfolios, it will lift much of the pressure off the intermediary and the insurer, while also empowering brokers to deliver faster and more exceptional customer service, powered by the latest technology, information and trends.

In addition, by minimising the use of emails and other less secure forms of communication, conducting transactions via safe e-commerce platforms actually serves to mitigate the risks of cybercrime.

Until online insurance becomes a market trend, we may not see too much focus on it. However, what is apparent is that an omnichannel approach is imminent and unavoidable.

Indwe Risk Services is an authorised Financial Services Provider. FSP: 3425