A frustrated and grieving KwaZulu-Natal family dumped the body of their relative at an Old Mutual office in a bid to force Africa’s oldest insurer to pay out their funeral policy claim.
After receiving a barrage of bad social and formal media publicity, the insurer ended up settling the claim.
The horrible incident in 2019 got everyone hot under the collar for a few months. At the time, it became clear that policyholders expect interactions with insurers to be fast, efficient, and as simple as possible.
But we all know that giant insurers are not yet giving policyholders what they want: a seamless, quick, and straightforward digital experience.
Stung by criticism of snail pace processes, South Africa’s two traditional big insurers — Old Mutual and Sanlam — are now seeking to digitise their operations.
The move is forcing insurers to seek new partners in developing their next-generation operating models.
Old Mutual has announced plans to look for investment opportunities in the Insurtech industry. Insurtech is the use of technology innovations designed to squeeze out savings and efficiency from the outdated insurance industry model.
In short, Insurtechs are the Fintechs of the insurance sector.
Old Mutual said that through London and New York-based Anthemis Group it will deploy capital focused on funding companies in the Insurtech space. It did not disclose how much it plans to splurge on this investment.
The collaboration will see Old Mutual act as the exclusive strategic investor for Africa in the Anthemis Group.
To support this goal, Anthemis Group and Old Mutual will look for and invest in innovative companies in Africa and across the globe that are advancing the digital transformation and disruption of the financial services sector, said Williamson.
This is a wise move by Old Mutual to seek to invest in the disrupters of the industry. But it seems Old Mutual is late to the party.
In 2019 rival Sanlam, the largest insurer in Africa, started a relationship with MTN to make a range of innovative and inclusive financial services available to the continent’s biggest mobile phone operator’s digitally savvy customers.
That relationship resulted in both companies creating a $100m, or R1.47bn joint venture to tackle the African digital insurance market.
Sanlam and MTN will each commit $50m to form the partnership.
That’s big money to ensure that the alliance tackles this huge opportunity.
According to the International Risk Management Institute, the African insurance industry holds a valuation of $68bn as measured by gross written premiums.
To indicate its determination to tackle this lucrative market, MTN has also revealed it has taken full control of aYo, a mobile microinsurance joint venture it started with SA’s third-biggest insurer, Momentum Metropolitan.
aYo operates in Uganda, Ghana, Ivory Coast and Zambia.
MTN disclosed that the aYo platform will form the base of the alliance with Sanlam. The MTN and Sanlam alliance seems to be far ahead of Old Mutual’s plans to invest in companies in Insurtech.
The aYo platform already has more than 13.6-million registered policyholders and 6.3-million active policies.
MTN is aiming to have more than 30-million policyholders for aYo by 2025 with this new Sanlam alliance.
Those are big numbers, and it will take Old Mutual a miracle to reach such numbers or exceed them.
To create its digital insurance alliance, perhaps Old Mutual could partner with Vodacom, which also owns Kenya’s mobile phone giant Safaricom.
Vodacom is already big on insurance through Vodacom Financial Services and the digital business.
Vodacom in partnership with Old Mutual will go a long way to develop insurance solutions for their respective customers across Africa.
Let us hope the executives of both companies are listening as this may create a huge new revenue stream for both entities.
Such an alliance will also create much-needed competition for MTN and Sanlam and provide a variety of products for customers.
That said, it seems all is not lost for Old Mutual. It appears the insurer has been laying the foundation to ensure that its house is in order before it competes head-on in the digital space with its rivals and telcos.
In 2019, Old Mutual selected Amazon Web Services (AWS) as its preferred cloud provider and migrated its digital customer platforms, core insurance applications, and product administration systems to the cloud.
The insurer is betting on AWS’s unmatched functionality, performance, reliable global infrastructure and security to help it modernise its technology infrastructure, rapidly innovate, and enhance customers’ insurance and banking experience.
The partnership also enabled Old Mutual to integrate AWS’s analytics and machine learning services into its business processes to drive greater insights to help build more personalised customer-facing applications and experiences.
So it seems that after three years, Old Mutual is ready to unleash its modernised infrastructure and transform into a digital insurer Africa wants.
Old Mutual may be lagging in playing in the Insurtech space, but its modern infrastructure could help it make the right decisions through data.
This will enable it to compete directly with Sanlam and MTN, but going it alone will not do justice to its cause.
It needs a mobile partner to be aggressive in its move. If not a partnership with Vodacom, then Airtel Africa could be a great partner.
Furthermore, Old Mutual’s planned investment in companies in the Insurtech industry is not going to be easy. The space has no shortages of investors seeking accretive value players.
Naspers has taken a huge interest in developing the Insurtech ecosystem. The company has taken a R120m bet on Naked, the artificial intelligence-driven Insurtech company offering a new, fully digital way for consumers to insure their cars, homes, and valuables. It has also invested R34m in digital short-term insurance advice platform Ctrl.
SixThirty, a US-based tech venture capital fund, has made a multi-million-rand investment in Click2Sure to enable SA’s Insurtech company to further develop its product and ensure businesses offering insurance take advantage of the benefits of digitisation.
The Old Mutual Enterprise & Supplier Development Fund was one of the investors in Pineapple.
Pineapple, an Insurtech start-up, raised R80m in funding to upend the car insurance industry.
Furthermore, Pineapple’s insurance policies are underwritten by Old Mutual Insure and founding innovation partner Hannover-Re.
Naspers on its own has big pockets to continue disrupting the insurance space by pumping more money on its chosen Insurtechs to challenge Sanlam and Old Mutual.
For now, the battle over digital insurance is a welcome move in Africa. It could be a boon for job creation across the continent. The insurers and the mobile phone operators will be required to create a new workforce model.
If this battle continues, young people stand a chance to be trained and employed in new fields of automation, artificial intelligence and machine learning.
It seems as if the revolution in customer experience, and searches for new lucrative revenue streams, are triggering a disruption in Africa’s insurance space.
At this time, we as customers can only smile and say bring the competition on, and just maybe we can finally enjoy a seamless customer experience from big insurers.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.