The insurance industry must embrace technology, block-chain in particular, in order to deal with the problem of low insurance and pension’s penetration, a senior official with the Insurance and Pensions Commission said.
Mrs Lynn Mukonoweshuro, chairman of the IPEC board, at a breakfast presentation on blockchain technology recently, said financial inclusion, including insurance penetration, cannot be wholly attained with the current methods of insurance delivery, which rely solely on the use of brokers and agents.
“It is time that we harness technology to develop products that are tailored to the needs of the digital customer, which is where our demographic patterns are pointing to.
“In this regard, I wish to challenge the market to pioneer in adopting blockchain technology to attain universal access to insurance and pensions through harnessing the power of technology,” said Mrs Mukonoweshuro.
The call comes at a time other insurance organisations worldwide have begun adopting block-chain technology to better quantify and manage risk and improve underwriting and claims adjustments.
Global insurance brokerage and risk management firm Marsh, which also has offices in Zimbabwe, uses commercial block-chain service for proof of insurance in order to switch its system from complicated and manual to streamlined and transparent.
The American Association of Insurance Services (AAIS) also introduced the “first secure, open block-chain platform” for managing the collection of statistical data by insurance carriers, regulators, as well as other participating contributors.
Mrs Mukonoweshuro is convinced the adoption of the same block-chain technology “is the silver bullet to the problem of low insurance and pension’s penetration.”
She said automated systems help to deal with the severe challenge of data integrity in this market and delays in production of timely information for all stakeholders.
“There is a variety of breakthrough technologies that have transformed the insurance industry in other markets.
“These technologies are providing new ways to measure, control, and price risk, engage with customers, reduce cost, improve efficiency, and expand insurability,” said Mrs Mukonoweshuro.
She added that technologies are also enabling the creation of new insurance products, services, business models, as well as new ways of risk assessment and insurance pricing.
“Risk assessment is now informed by endpoint devices and social media data from Facebook, Twitter, or other networks, which provides large amounts of more personal data about policyholders.
“Such basic optimal utilisation of technology is critical if we are to begin discussions on embracing digital technologies such as block chain.
“In this regard, I wish to challenge the market to pioneer in adopting block-chain technology to attain universal access to insurance and pensions through harnessing the power of technology.
The regulator has already dedicated resources towards building capacity in the area of technology and financial inclusion.
The insurance and pensions regulator has also established a Research and Innovation Unit within IPEC, whose thrust is to collaborate with institutions to ensure that the regulator is well equipped to facilitate innovation and digital transformation of the insurance industry.
Furthermore, IPEC has since joined membership of the Alliance for Financial Inclusion so as to keep track of regulatory developments in other markets to facilitate improvements in insurance penetration.
Mrs Mukonoweshuro’s comments dovetails with newly appointed Finance Minister Mthuli Ncube’s views on technology.
Minister Ncube is on record saying central banks should create a unit to try and understand cryptocurrency instead of banning their use.
“I think the attitude for Zimbabwe should be to invest in understanding innovations and often central banks are too slow in investing in these technologies. But there are other countries which are moving faster.
We have innovative youngsters so the idea shouldn’t be to stop it and say don’t do this but rather the regulators should invest in catching up with them and find ways to understand it, then you regulate it because you now understand it.