An Opportunity For GCC Insurers To Get Ahead of The Competition
Fintech Middle East & Africa

An Opportunity for GCC Insurers To Get Ahead of the Competition

The advent of digital platforms, mobile apps, and big data, means that customers now expect quicker and more effective service than ever before. This is becoming more apparent in the Gulf Cooperation Council (GCC) region consisting of six countries: Saudi Arabia, United Arab Emirates (UAE), Qatar, Bahrain, Kuwait and Oman.

With such a rapid change in customer behaviour sweeping across an increasingly connected GCC region and only accelerated by COVID-19, Mukund Bhatnagar, a partner in the Dubai office of Kearney and the MEA Lead of Financial Services practice and Piyush Dubey, Senior Principal in the Kearney Dubai office, share their insights.

Mukund Bhatnagar is a partner at Kearney
Mukund Bhatnagar is a partner at Kearney

With the advent of digital platforms, mobile apps, and big data, customers now expect quicker and more effective service than ever before. And they expect that enhanced level of service from the moment they buy a policy right through to the settlement of a claim. Social distancing measures introduced during the ongoing COVID-19 pandemic have also forced many laggards to become early adopters of digital and seek out online solutions. Meanwhile, global firms too are seeking to harness the power of digital solutions to help them understand their customers better—and increase effectiveness and minimise losses as a result.

Global players are innovating right across the value chain. They’re doing this by deploying new-age technologies such as AI, internet of things (IoT), drones, and blockchain to generate more value in marketing and distribution, product development and underwriting, and in claims prevention and customer support. Maximising the impact of these initiatives starts with digitalising the firm’s core operations in order to gear it up—in terms of processes, people, data, and infrastructure—for seamless integration and alignment with the new technologies.

Piyush Dubey
Piyush Dubey, Senior Principal, Financial Services, Kearney Middle East

As the insurance sector expands in the GCC—one of the world’s fastest-growing markets—regional players now have the perfect opportunity to reap the rewards of being early movers in the global digital transformation story. IoT spending in the Middle East and Africa is expected to grow at a compound annual growth rate of ~16% and reach $17.6 billion by 2023. The GCC countries are also leading the race to introduce 5G, with operators in Saudi Arabia, the UAE, Kuwait, and Qatar already having launched 5G services to a varying extent. So, what does a more connected and automated GCC mean for insurers? Crucially, it gives them the perfect opportunity to out-innovate the competition, and to create value by enhancing customer experience, improving the accuracy of risk assessment, and reducing operational costs and claims-related losses.

Insurers are adapting rapidly by embracing new technologies to delight the customers

Customers now expect the information they need to be transparent, easy to understand, and quick to access. Insurers are stepping up to meet these demands by deploying AI-powered platforms, which replace human input through features like automated product recommendations and query resolutions by chatbots. Esurance, for instance, employs a direct insurance digital approach to customers, cutting out “middlemen” agents to offer lower, more competitive rates.

Some firms in the GCC have already started implementing the technology to make this happen. For instance, I-Insured has launched an AI-based SafeDriver Pay-How-You-Drive (PHYD) app that offers policyholders lower premiums and incentives based on their driving behaviour. Union Insurance Company also uses AI, which uses natural language processing to extract data from documents, to issue motor policies in less than one minute for the first time ever in the UAE. Five regional insurance players—Aman Insurance, Al Wathba Insurance, National Takaful Co. (Watania), Noor Takaful, and Oriental Insurance—collaborated with insurtech firm Addenda to adopt its blockchain platform as a part of their digitalisation strategy and to streamline their processes.

Innovations that speed up the claims process are not only focused on providing convenience to customers. They’re also designed to reduce the cost of processing those claims for insurers. Typically inefficient processes and lack of digitalisation are drawbacks of the claims management process, but automated digital platforms are now being used by some insurers to file and record insurance claims. Using AI to understand first-notice-of-loss images, insurers have successfully processed claims within minutes. Insurers are also scanning medical records, data on surgeries and hospital stays through a cognitive machine-learning (ML) tools to calculate pay-out. In fact, AI-powered claims processing, coupled with other emerging technologies, is advancing the fraud detection capabilities of insurance firms.

Blockchain technology is delivering a number of compelling benefits for insurers. As well as enabling them to process smart contracts to speed up claims process on parametric insurance products, blockchain also allows them to collaborate by sharing data securely and anonymously, and to uncover current blind spots to improve fraud detection.

Insurance firms are using IoT devices to alert customers in real-time on potential risks, correct customer behaviour, and leverage the data to gauge risk levels and implement measures to prevent claims in the first place. Liberty Mutual has partnered with Google’s Nest to implement connected smoke alarms and reduce home insurance premiums. Nest alerts customers to smoke, increasing the chances of avoiding damage being done in the first place. FitBit, the popular mobile fitness app, monitors customers’ behaviour and feeds them with objective data that helps them adopt a healthier lifestyle. And British insurance provider, Vitality, now runs a rewards program that uses similar fitness trackers and smart wearables to help its health insurance customers earn points as they manage their health risk.

Insurers seeking to establish themselves as digitalisation winners must adopt a structured approach that enables them to:

–      Step 1 – Identify the right use-cases

–      Step 2 – Digitalise the core operations

–      Step 3 – Create a portfolio of digitalisation initiatives

–      Step 4 – Build a strategic blueprint

Digitalisation in the insurance space is here to stay. As the GCC’s nascent insurance sector continues to expand, the region’s firms now have an opportunity to stay ahead of the curve by adopting digital technology in the immediate term.

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