On Digital Transformation

Prompted by an invitation from the organizers of the Multaqa insurance conference to join a business leaders’ roundtable earlier this week in Qatar, a couple of frantic hours reading up on the subject of our discussion, the digital transformation of the insurance industry, turned out to be time very well spent.

Of little surprise was to learn the extent that the Internet has transformed consumer’s buying patterns and preferences in the more mature markets of the world. Not least in UK where these days over two-thirds of private motor insurance is sold on the phone or via web applications and price comparison sites. Even beyond highly commoditized products, there are signs of digital innovation. One of several interesting examples is ‘Bought by Many’ (www.boughtbymany.com) where individuals with hard-to-find insurance needs form larger buying groups online to access coverage from suppliers at more competitive rates. These might be owners of rare animals or parents of children learning to horse ride.

However more impressive than this is what is happening in the developing economies where the needs of the many are a bit more fundamental than arranging cover for the pet bulldog or Jemima and her pony. Taking the lead from the banking sector, micro-insurers are partnering with mobile phone companies to access low-income groups to provide easy to understand insurance essentials (e.g. life, accident and sickness policies) at premium levels the rural populations can afford. By simply offering tranches of coverage to mobile phone users each time they top-up their SIM card, has bought an estimated 500 million people into the African and Indian insurance market who would otherwise have remained unprotected.

Returning to Qatar, the roundtable discussion understandably turned to the Middle East and Gulf region. Reportedly 40% of all local insurers have not yet even built a website but we know the landscape in a digital age can change very quickly. That digital transformation was selected for discussion in the first place suggests that interest is growing in new innovative channels to improve insurance awareness and penetration, which is good for the customer and the development of the local industry.