How ‘digital’ is the way forward for insurance providers in the UAE

The pandemic has fundamentally changed people.

While that might be a bold statement, most industry experts – across sectors – will attest to the fact that consumer behaviour has transformed, although it remains to be seen whether the impact will be temporary or permanent.Looking at the UAE’s insurance sector, the change in consumer attitudes had a direct bearing on the industry’s outlook.

“Prior to Covid-19, there was less of an immediate focus on protection by consumers in the market. As 2020 progressed, however, we started to see a trend that saw people re-assess their priorities when it comes to insurance cover and shielding themselves and their families from risks posed by death, disability and long-term illness. This translated into a tangible shift towards financial protection and in their expectations from insurance providers,” says Simon Price – head of Market Management at Zurich Middle East.

A recent survey con-ducted by YouGov and commissioned by Zurich in the UAE stated that more than half of the respondents – across all age categories – said that due to Covid-19, they were somewhat likely or extremely likely to consider purchasing life or critical illness cover, with more than 63.3 per cent of respondents aged 18-34 saying they purchased life insurance since the start of the pandemic.

“This statistic demonstrates the real-world impact the pandemic has had on people’s purchase behaviour. While there are people who believe insurance is not a necessity and live under the misconception that it’s rather expensive, or that they do not need it because they are young and healthy, the pandemic has certainly caused a lot of people to reconsider and we have seen a shift in mindset,” explains Price.“While the Middle East insurance market is under-penetrated, the pandemic has been instrumental in driving a new wave of demand in the UAE. Life and health insurers witnessed an increase in the number of claims during the past year, where individuals required hospitalisation and medical attention, as well as cover for deaths,” he adds.

Stefano Nalin, EVP Business Development at Abu Dhabi National Insurance Company (ADNIC), also credits the way the UAE’s insurance sector handled the pandemic. “The industry swiftly, adroitly and effectively implemented measures to help individuals and businesses stay safe and recover, adapting both coverage and operations to meet new risks and new requirements.”

He adds: “With the end of the pandemic now in sight, one legacy may be the emergence of a more mature and sophisticated UAE insurance sector. The pandemic has certainly focused people’s minds on the importance of protecting themselves against risks, while the more sophisticated products and services born from the massive innovation seen over the last year may be the catalyst for significant growth in the industry.”

TECH GROWTH
Predictably, one major trend that has emerged in the insurance industry is the accelerated adoption of technology. On the consumers’ end, individuals increasingly prefer to research and purchase insurance options digitally – especially with the rise in the number of online platforms that offer comparative analysis of the different packages available in the market.A global report by IT firm Capgemini last year found that policyholders’ willingness to purchase insurance from bigtech players increased from 17 per cent in 2016 to 36 per cent in January 2020 and 44 per cent in April 2020.

“To compete with bigtechs, insurers need to focus on critical priorities which are important including delivering superior customer experience (94 per cent), crisis-proof processes (90 per cent), deliver real-time response (87 per cent), be a caring partner (86 per cent), and have insurance-as-a-utility (70 per cent),” the report stated.

It also found that insurance providers are falling short when it comes to utilising the cloud and open APIs (application programming interfaces). Among the survey respondents, only 19 per cent said they have touchless processes, 29 per cent have human-centred design capabilities and digital-ready systems, 38 per cent have implemented open APIs, and 48 per cent have a cloud-native enterprise. However, insurance players are recognising the need to embrace digital transformation to drive operational agility and ensure long-term growth, says Price.

“Digitalisation has definitely become more prevalent and has played an incredibly important role over the past year. To meet customers’ growing demands and to help them during their time of need, it is essential for businesses to adopt new technology. In the past year, most businesses have deployed new technology that has enhanced customer service, putting more emphasis on user-friendly platforms that can be accessed from the comfort of their home. This also helps businesses stay relevant in today’s ever-changing market,” he says.

According to Nalin, the key to successfully implementing digital transformation is about putting people first. “Investments into technology over the last year have not only met safety criteria and supported customers through the pandemic, they have also served to move the industry forward into the 24/7 digital realm. Moving forward, it is very much about providing customers mature and sophisticated offerings across channels and consumer line products. Digital transformation is about constantly updating and modernising digital experiences. Gone are the days when general site updates were sufficient in aiding customers, because in an era where digital means dealing with multifaceted integrations, multiple systems and services and deliveries across a variety of channels and devices, then customer centricity means an entirely relevant and seamless experience anywhere, anytime, anyhow,” he says.

“This change, perhaps more than any other due to Covid-19, is one the UAE’s insurance sector will have to realise is going to be forever ingrained into customer culture. Quite simply, it is a matter of fact that ‘24/7 consumer culture’ is now permanent,” Nalin adds.

GROWTH PATH
Looking ahead, there are potential opportunities to explore across all verticals within the industry.

“The rising cost of healthcare alongside the pandemic has created an upsurge in demand for protection, particularly critical illness insurance, to bridge the gap between any health insurance and actual costs of treatment for serious health conditions,” says Price.

With life insurance penetration in the UAE currently at 0.5 per cent, there will likely be a growth in that segment, especially since Covid-19 has increased aware-ness of financial and health risks among consumers.

“On the macro-economic level, the UAE is currently projecting normal rates of growth, which would support demand growth across both the insurance retail and group segments,” he adds.