Africa: Insurance regulators urged to be more proactive towards digitalisation

Insurance regulators in Africa should adopt a more proactive stance towards digitisation as such support is seen as vital to promote digital trans¬formation, according to respondents to a recent survey.
85per cent of interviewees stated that regulators need to do more to help advance the digitisation of Africa’s insurance industry, says the report “Africa Insurance Pulse – The digitisation of Africa’s insurance markets”.
Faber Consulting carried out the study and produced the re¬port which was launched by the Africa Insurance Organisation (AIO) and sponsored exclusively by Africa Re, the largest rein¬surer in Africa. The findings of the report draw on in-depth and structured telephone interviews with 30 senior executives rep-resenting regional and international (re)insurance companies and intermediaries. Faber Consulting conducted the interviews from January to June 2020.
Currently, only 15 per cent of interviewees are satisfied with the actions taken by their local regulator.
Regulatory framework
Mostly, insurers expect regulators to establish and enforce a legislative and regulatory framework that encourages the use of new communication and information technologies and sup¬port the digitisation of existing and new lines of business. They want regulators to be more pro¬active given the speed at which new technologies emerge and new players enter the market.
In addition, regulators should assure a level playing field, endorsing best practices at the continental/regional level and promoting a harmonisation of practices within markets and across sectors. Within the insurance sector, both incumbents and new players require equal access to the market and that interests of customers have to be protected at all times.
Nearly all interviewees agree that personal lines have the most significant potential for going digital. However, insurers demand regulators become more open to digitising products — in particular in accepting electron¬ic signatures and documents.
Cautious approach
Currently, most African insurance executives take a cautious approach when investing in the technology, using a sum equivalent of up to 2 per cent of their revenues to drive forward their digitisation strategy. One reason could be insurers are still wary as to when the positive effects of digitisation will materialise. Given the uncertainty, most interviewees take a cautious investment approach.