Data-Driven Insurance in the African Market

Some notes on a McKinsey article about the African Insurance Industry (https://www.mckinsey.com/featured-insights/middle-east-and-africa/africas-insurance-market-is-set-for-takeoff).

The big conclusion is that Africa’s insurance industry has all the conditions for further growth in the near future.

Africa is one of the world’s hot regions for insurance. Steady economic growth in most countries combined with a largely underdeveloped insurance sector have positioned the continent as the second-fastest-growing region for insurance globally after Latin America.

McKinsey

This is a lively industry on the continent and McKinsey’s recommendation is to follow five trends to achieve the desired success:

1. Choose expansion countries wisely, focusing on cities

2. Target unique customer segments and needs, while leveraging the power of partnerships

3. Focus on digital and digital-enablement of the agent to increase reach and productivity

4. Collaborate with governments and regulatory bodies to help shape and reform the agenda

5. Build capabilities to unleash Africa’s talent

Insurance companies focused on taking advantage of these opportunities need to develop their strategies around the creation of innovative, customer focused products, channels and services, in other words, making digital transformation a top priority.

The critical Role of Data

Reflecting on the trends mentioned above it’s easy to identify the critical role data plays in this transformation, a journey into data-driven organizations, nurturing a data culture among their workers, enabling the capabilities for data driven decision processes, product and services developments and customer engagement.

Since the beginning data has always been the core of the insurance industry, a data culture is already embedded in the all the business processes, in an industry where statistical analysis is at the central part of the business itself, where data has always been used to inform underwriting decisions, price policies, settle claims or prevent fraud.

The transition that needs to occur is to allow data into new dimension, walking into a more data and digitally driven industry, where data plays a new role as a business asset, creating value to the organization, but also to its customers and employees.

• This is the moment where Insurance companies need to understand the value of their data as a key business enabler.

• This is the moment to see the added value of data governance, data quality or more specific solutions as master data management or data catalogues.

• This is the moment to understand that these are prerequisites for all data related initiatives, from data collection to analytics, to the use of AI or ML.

• This is the moment is to tackle the challenges posed by data ecosystems where data is spread across a wide variety of applications, and data ownership is scattered across the business and IT.

• This is the moment to avoid falling into the temptation of jumping forward implementing reporting tools, analytic tools, and repositories — with all the tools that go with them.

• This is the moment to focus on data quality, data management, data policies, and the data dependent processes.

• This is the moment to assure organizations have reliable and consistent data, available to the right people in the right time.

An effective transition into a data-driven organization can only be achieve when is grounded on a strong data foundation.

Becoming a data-driven organization and building a data culture is a difficult and long process.

Delivering business value and removing corporate culture friction are the main challenges and the chosen approach to this process, will determine the chances for success.

Focus on clearly identified high-impact business problems or business cases. Looking into the most common business drivers for data initiatives, such as to support risk management and regulatory reporting, to tackle mergers, and acquisitions, to gain a competitive edge, to allow more educated and real-time decision making, to save or reduce costs, or to assist in up-sales and cross-sales, to name a few, it’s easy to identify where there is a critical business need.

Tackling these specific problems allows to quickly demonstrate value through “quick wins”.

These success stories, that start with a small, targeted initiative, where the impact and value of data can be clearly identified and working with a business stakeholder that can passionately and effectively articulate the impacts of data in their business processes build credibility and act as a steppingstone to identify additional high-impact business cases to build business momentum.

This requires a critical shift of mindset, the driver for this transformation can’t be IT, as traditionally is. All the program and initiatives must be driven and oriented by the business units. Business must be on the driver sit.

Becoming a data-driven organization is a long-term process that requires persistence and determination. Every data initiative can be a step in the right direction, but the focus must be on the business purpose, not in data itself.