Insurance in Africa: The threat of tech
No insurer wants to see new innovators encroaching on their territory. To outflank them, some are working with these fintech companies to help pursue their own technological projects, reach the continent’s large uninsured populations, develop new products and cut costs.
African banking is no stranger to financial technology, known as fintech. In some areas it is leading the way, especially in loan, payment and remittance technology. But in the sedate world of insurance, fintech has been slower off the blocks, especially on the continent.
That is not to say that insurers are sleeping on the threat. According to PwC research published last year, around half “of insurers [globally] fear that up to 20% of their business could be lost to standalone fintech companies within the next five years.” The threat comes from nimble feet. PwC said tech startup companies “are accessing and analysing data in new ways and in record time, not hindered by legacy technology systems as their incumbent competitors are.”
This does not mean the industry is at a point of weakness. Running an insurance company requires heavy lifting: policies need large pools of capital, and regulation is tight. Fintech companies generally do not want to be insurers but to provide services to the industry. Innovative technology can reduce costs and bureaucracy and help to keep customers happy.