Investments in InsurTech in the MENA region have
predominantly been given to price comparison players, aggregating products and services already in the markets, further keeping focus on existing products and services, notes Mr Frederik Bisbjerg, an international business (digital) transformation specialist.
In a paper titled “The MENA insurance industry – headed for a fall?”, he observes that outside MENA, investments have been more diversified, spread across all lines of products and services, with a major share of investments allocated to InsurTechs focussing on insurance process optimisation and support.
In the paper, Mr Bisbjerg describes developments in the region's insurance market which have led to the current state of technology.
Most consumer technology is imported from outside the region, often bought through global, digital marketplaces instead of local companies or online portals. This has at least two implications: first, the customers are accustomed to the newest and best of technology and, since the technology is bought online through global marketplaces, consumers are used to state-of-the art customer journeys and digital user experiences.
Second, the overseas online options have resulted in reduced demand for local digital marketplaces, so local players have less incentive for investing in digital solutions capable of competing with the global players There’s a growing gap here as the technology in the hands of the users, and their digital user experiences, are advancing faster than the local markets are capable of keeping up with, because the skillsets required for advanced digital development are not present in the region to the extent required – the demand for local high-end tech competencies has up till now been low as most technology is imported.
Mr Bisbjerg says that understanding why the region's markets have been reluctant to change is important in defining the future strategic direction.
He says that many incumbent insurers in the region face the same four major organisational challenges to responding effectively to market developments and changes in customer needs and expectations, that are:
• “Not on my shift”: the senior management of incumbent insurers are ageing, with many CEOs looking forward to retiring within the foreseeable future. This may result in CEOs postponing large change initiatives to allow their successors to design and run the projects.
• Disorientation: the market change around insurers in the region, and the change happening with insurers outside the region, has left incumbents disoriented with no clear idea of what to do next.
• Lack of talent: digital talent, transformation expertise, and agile ways of working, are prerequisites for organisations to succeed – these skill sets are difficult to find in the region, creating a competence gap.
• A Herculean task: as an industry, insurance entities have historically been bureaucratic, shaped by strict financial and regulatory requirements. This has created rigid, siloed organisations that are very resistant to process and span-of-control changes.
Summing up, Mr Bisbjerg says the challenges paint a picture of an insurance industry that may be aware that change must happen, but in general does not possess the toolbox nor the people to create and implement the necessary strategies and plans.