Deloitte has warned that COVID-19 will severely impact the profitability of underwriters in the region.
While insurers have been able to absorb the underwriting impacts of large loss events, the East Africa Insurance Outlook Report 2020/21 says the impact of the pandemic on the insurance industry remains uncertain for now.
The report takes a deeper look at opportunities in the insurance sector, focusing on Kenya, Tanzania, and Uganda.
The report observes that while efforts have been put in place by governments to cushion the public, disruptive effects of the pandemic on the insurance business will remain for an extended period before the industry recovers.
With stock markets showing declines in performance and flattening yield curves, insurers are staring at poor performance as the value of their equity holdings is hit.
Additionally, digital transformation is revolutionizing different industries at a faster than anticipated pace.
Despite the rapid transformations observed in other industries, insurance companies are yet to join the bandwagon.
As we move into the future, insurers need to prioritize transforming their operating model to serve their customers better, manage their costs, and leverage technology to increase their market penetration.
The report mentions that COVID-19 pandemic has accelerated the rate at which disruption in the industry will occur, and this will shape the leaders and laggers of insurance in the future.
“There is a significant opportunity for insurers to simplify, modernize, and personalize policies, to achieve more meaningful engagement and results from the ever-discerning customer. This is achievable if insurers start refining and improving their product offerings as they seek more agile ways of working and developing their operational processes, ” said Rebecca Kariru-Muriuki- Deloitte East Africa Insurance Industry Leader.
Insurers will need to rethink their operating models, reimagine their workforce, and start thinking of agile methods of meeting the needs of the market, said the report.
With the increasingly discerning consumer, insurers are told to be aware of the potential for external market participants encroaching on their market share.
Consumers are seeking for solutions to manage their risk in a way that is convenient to them, and insurers need to develop solutions that meet these needs instead of the traditional product-push approach that has been successful in the past.
With growth in premiums already constrained moving into 2021, insurers need to immerse themselves into transforming their businesses from the inside out.
It will take transformative changes in insurers’ strategy and operating models to withstand the waves of change that are threatening to disrupt the future of insurance.
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