SA insurance gap widening

It is an issue in South Africa where a large portion of the population is either uninsured or underinsured. Liberty’s divisional director for risk product innovation, Nicholas van der Nest, noted this week that the insurance gap in South Africa is widening.

However, there may be a way of addressing this issue going forward. Van der Nest noted that the insurance industry needs to evolve its way of thinking and operating following the constant evolution of the world around us.

Van der Nest stated: “The constant evolution of the world around us has significant implications for the way we think about life, what is acceptable and what is not. The insurance industry is not immune to the changes our customers face and as such we need to make urgent changes to our way of thinking if we are going to adequately meet our clients’ long-term financial security needs.”

The widening insurance gap

“The insurance gap measures the difference between the amount of insurance cover required in order to retain the same standard of living following death or disability of a family member and the amount of cover actually in place,” explained van der Nest.

Furthermore, van der Nest noted: “This is important as it measures the level of shortfall of insurance cover and hence the impact death or disability could have on the country. The gap can only be filled by ensuring all South Africans have the cover they need in place. To achieve this we need to create awareness of the gap, its potential impact on a family and better understand the reasons for not having cover in place to find appropriate solutions to address them.”

How technology can bridge the gap

Technology is a part of many aspects of our everyday lives, and this may soon be true for the insurance industry as well. An article by Risk Africa Magazine earlier this year looked at the use of technology by some insurance companies to monitor people’s driving.

Philippa Wild, head of technical marketing at Discovery Insure, said: “Technology in insurance is an emerging trend that will continue to increasingly play a crucial role and insurers will keep adopting this, perhaps even move away from traditional underwriting in the future.”

Van der Nest agreed, stating: “Just like smartphones made digital photography accessible to users, advances in technology could be used to make insurance solutions accessible to the entire population. By ensuring this cover is in place, we can fill the insurance gap and create greater long-term financial security for ordinary South Africans.”

While not main stream yet, there are already examples of how technology can have a positive impact on the insurance sector. The Discovery Insure App provides feedback on your driving behaviour, and gives you a score out of five. The aim of the app is to help drivers improve their driving performance. This is one example of technology that may be useful to insurers in the future when creating personalised insurance cover.

Discovery also offers Vitality Rewards, where you monitor your fitness and steps, and are rewarded for reaching specific milestones. The technology used for this, could in the future assist medical aids and life insurance companies to offer more person specific cover.

However, this information could also be used against the consumer, if the insurance company were to use the information collected to repudiate a claim.

Another development that van Der Nest noted was happened upon by accident. While not the intention of the developers, sensor bras are able to detect heat spots in the breast, and early indication of breast cancer. If used correctly, this technology could be used to detect breast cancer at its earliest stages, therefore aiding in the effective treatment of the cancer, and reduce the long term medical costs associated with cancer treatment.

While steps are being taken and trials are being run to monitor consumer behaviour and lifestyle choices through technology, it is not being utilised by the insurance industry to the degree that it could.

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