January 19, 2021
One thing we can be sure of is that change is here to stay in 2021, especially within the business sphere. The South African car insurance industry has not escaped innovation, exemplified by a striking trend of abandoning old insurance processes for new innovative ones. The latter is being created through advanced technology and new business models.
These consist of product design, underwriting and pricing, administration, and distribution and managing claims. But, due to advanced technologies and, as a result, an ever-changing customer mindset, car insurers are being compelled to change their business models. ‘Customers’ are replacing ‘car insurance products’ as the focal point of insurers’ business models.
Car insurers are beginning to replace the usual risk-based underwriting with risk management. Digitisation has optimised processes from a cost-saving point of view as well as by improving customer communication and satisfaction. A good example of this is how the banking industry has changed from having to visit a branch and write out cheques to conducting everything online.
Car insurance companies have always been capturing data, which is further advanced through analytics. This has provided insurers with insights to choose the correct risk level, thereby reducing the margin of error.
Instead of working with old systems that comprised of call centres and personal visits, the car insurance industry now considers a 24/7 response to customers as their highest priority. This enables virtual technology to supply immediate and up to date information via mobile apps.
Even though customers prefer to use the Internet to search for the best car insurance deals, most car insurance deals are still occurring via telephone or through personal interaction. Insurance companies are beginning to realise that customers prefer online interaction. In this way, they are forced to reconsider their entire approach and shift into a seamless, continuous digital operation.
A possible future threat to the car insurance industry worldwide and in South Africa could be connected to cars and driverless cars. These may reduce risk and decrease premiums as well. In fact, it has been predicted that, due to changed customer actions and advanced technology, premiums may drop considerably over the next decade.
Advanced technology and IoT (Internet of Things) devices are providing insurance products that can be adapted to virtually anyone’s situation.
Because car insurance is complicated, this article must only be considered as information. Please contact a certified, financial advisor for professional advice if you want to purchase a car insurance product.
Are you thinking of buying affordable, innovative car insurance in South Africa? Consider buying car insurance with PMD, which offers unique, forward-thinking benefits such as premiums that never increase*. T’s and C’s apply.