Public Administration News
||South Africa: Innovation is the Name of the Game
||Tuesday, July 28, 2015
Electronic and Mobile Government, Internet Governance
||Jul 28, 2015
Technology is becoming a key differentiator in
the way in which a company produces new products and delivers services. A prime
example of this would be Uber, which is simply a technology platform for the
connection of passengers with the supply of transport. It has completely
disrupted the taxi industry in each country where it has launched. And the
potential for future disruption lies in Uber providing courier services, or
Another example would be Facebook which purchased WhatsApp for $19-billion. It is clear that the
social media website has its sights set on becoming a major telco, entirely
driven by technology. The launch of Instant Articles this month is just the beginning of Facebook’s assault on the publishing industry
while changing the distribution of news.
WeChat, a rapidly growing messaging app with well over 400
million monthly active users (WhatsApphas
more than 700 million), is becoming so much more than that. It is challenging
banks through offering payment options, it is one of the major portals for
Chinese gamers to find new games and in South Africa its microjobbing service
M4JAM (Money for Jam) is finding a ready market amongst businesses.
For an insurance company, we need to look at the
potential to use technology to create new options. There are insurance models
now which use technology to promote better consumer behaviour. For example,
motor insurance which utilises telematics to determine driving patterns and
rewards consumers for low risk driving. As we know, insurance is a risk
transferring business and through using technology to lower risk, an insurer is
able to drive claims down and reduce premiums. The classic win-win outcome.
But what if we took this further? What if we
were able to use real-time information to drive premiums lower still? For
example, if we could identify that a car is parked in a secure environment for
a period of time, the accident risk at that time would be lower with the car being
off the road. Just imagine if we could adapt premiums in real time to take such
variations into account. I believe that this is one direction in which the
insurance industry is headed.
Technology is also disintermediating the
insurance industry. Easier access to technology and social media has helped
consumers to undertake their own research without having to rely on third party
brokers. As the consumer has become a lot more aware, and access to both
information and technology has improved we’ve increasingly seen the broking
community shrinking and the rise of direct insurance.
It is critical to be aware of trends and
developments across all industries: the challenge to the insurance industry may
well emerge from outside the industry. For example, autonomous cars are
probably not far away from going into mass production. The impact on insurers
will be dramatic. So too will the impact of the Internet of Things (IoT) be
enormous. IoT - a network of smart inter-connected devices, people and
organisations – will provide real-time information about people, their assets
and their associated risks and so revolutionise insurance.
Friendsurance, a German startup founded by Tim
Kunde is another example of technology challenging the status quo.
Friendsurance is a website that is pioneering 'person-to-person' insurance:
friends together replicate the traditional insurance model, pooling resources
out of which small claims are paid while bigger claims are covered by
traditional insurers with whom the firm has partnerships.
Premiums are kept in check as insurance fraud is
lower: people are far less likely to defraud their friends than a faceless
insurance company. In addition, friends with more risky behaviour are excluded
from the group, leading to lower overall risk. There is also an elevated trust
factor when dealing with people you know compared to dealing with strangers. By
using the power of social networks the company offers its customers liability,
legal and household insurance at a competitive rate.
From being the facilitator of the production of
goods and services, technology is becoming the driver of them. All companies
will essentially be technology companies, just differing in the specifics of
the products which they deliver. CIOs need to constantly scan the environment
for potential threats to one’s industry, and insurance is no exception.
For more information, visit the Lion of Africa website. Alternatively, connect with the
company viaFacebook and on Twitter.