01 April 2019

Humanity 2.0: AI’s impact on the insurance industry in South Africa

Submitted by: Lise-Mari Smit
Humanity 2.0: AI’s impact on the insurance industry in South Africa

Peter bumps his car into a parking sign. The vehicle’s internal diagnostics tool determines the degree of the damage. The screen on the dash informs him of the damage, submits his claim to insurance and confirms that it’s been approved, and that a mobile response drone has been dispatched to the area for inspection. Peter can now direct the tow truck to take his vehicle to the nearest in-network garage for repair after a spare vehicle arrives. Perhaps this scenario isn’t as far off as we might imagine?

InsurTech, a sub-set of Fintech, is one of the hottest trends and fastest growing segments in South African finance today, pumping approximately ZAR37,2 billion into the US economy annually. According to Daniel Schreiber from U.S.-based Lemonade Insurance, the next insurance leaders will use bots, not brokers and AI, not actuaries. Dominique Collett, Head of Alpha Code, a club for next generation fintech entrepreneurs in Africa, states that InsurTech has gained momentum over the last two years in South Africa. It was initially seen as a threat by insurance companies, but now insurers are taking a more hands-on approach to grasp opportunities in this space.

dotsure.co.za, a South African insurance provider, is one of those companies, spearheading disruption through the adoption and advancement of AI with the belief that the insurance industry is in desperate need of change so that customers can experience better value. “The opportunities for change lie in innovation and in the use of technology”, says David Roache, MD of dotsure.co.za.  Being the first to launch the “quote, buy and manage your insurance online” offering in South Africa in 2011; dotsure.co.za recently celebrated the one-year anniversary of its AI chatbot, Dot. Statistics show that the innovation has proved fruitful. Over the past 6 months, the number of human interactions with Dot has trebled, while the average time it takes to resolve a query has decreased by 20% over the same time period due to the chatbot’s ability to learn smarter and more appropriate responses.

AI chatbots offer a host of benefits to the consumer:

  • A 24/7 approach - Consumers can access the information they need, when they need it.
  • User-friendliness – A quick and easy method to submit claims or view transaction history.
  • Reduced premiums – The cost saving benefit to the insurance provider, as a result of increased operational efficiency and reduced costs, is carried over to the consumer in the form of lower premiums.

Kennedy and Pienovi (2019) explains that chatbots are a natural extension for self-service abilities. They improve customer experience through a cooperative approach involving humans and AI. Half (49%) of consumers feel better about using chatbots if they know that they can escalate the experience to human communication.

According to Roache, “There is a growing awareness of the way in which digital technology will shape the future. Chatbots can benefit the insurance industry; changing it from within and bridging the gap between consumer and insurance provider”. By making it easier for consumers to answer common questions and perform activities like logging a claim, chatbots shift customers at the centre of insurance processes.

“Through innovation, technology and a culture of customer value, we can disrupt the insurance industry in order to deliver better products, with better service at lower premiums than our competitors,” Roache explains.

Other exciting South African InsurTech developments and trends in to look out for this year:

  • A combination of distribution and product innovation, such as providing a platform for innovators and insurers to build new insurance products on the front end without having to worry about regulatory, legal or capital structure obstacles.
  • Digitisation of product distribution, such as a digital insurance platform which allows retailers, for example, to offer a selection of custom-developed insurance products at the point of sale. Consumers can buy an item online and insure it at the point of purchase.
  • Third-parties that are working with insurers to digitise them. For example, building chatbots for insurers or innovative claims and administration platforms that allow insurers to get new products to market quickly.

“InsurTech is not just an increase in the way that technology is disrupting the insurance industry but is also changing consumer expectations and demands” says Ben Deda, VP of Marketing at Vertafore. As consumers are presented with technological conveniences in different areas of their lives, we see an increased demand for easier to use, more customizable and more accurate insurance products.

The future of chatbots, like Dot, lies in the exponential growth of AI and machine learning achieving human levels of intelligence. We all know it is coming sooner or later, but the question in the minds of almost everyone is: should humanity fear being replaced, or even enslaved by super-intelligent machines? Perhaps, instead the future will be of unparalleled human-machine synergism; powering us to be smarter and offer better, more customer-centric offerings and interactions? 

Sources:

Published in IT, New Media and Software

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