InsurTech

How Insurtech Innovation Can Digitally Transform the Travel Sector in Nigeria

ADEWUMI OJO

Digital transformation has the potential to radically reshape the world around us, from healthcare and government to banking and retail. But nowhere is the opportunity greater than in the travel sector.

Insurance is an often-overlooked proposition, yet insurtech players are lining up to offer innovative digital services designed to improve the policyholder experience and drive loyalty.

According to the World Economic Forum (WEF), the aviation, travel and tourism industry has been “at the forefront of digital disruption” for several years. Yet its research suggests that the sector should “brace itself” for yet another wave of transformation.

“Travel providers are seeking stronger interactions with customers, while drastically changing operations, in pursuit of better insights around customer preferences and operational performance,” its report explains.

Insurance penetration in Nigeria is low compared to other African countries like Kenya (2.7%) and South Africa (16.99%). With only 1% of Nigerians holding an insurance policy, there is clearly an untapped opportunity in the country.

The National Insurance Commission [Naicom] lists 13 composite, two re-insurance, 25 non-life, 14 life and two  takaful insurance companies on its website. Some of the well-known insurance companies in the country are AXA Mansard, Cornerstone Insurance, Industrial and General Insurance Plc among others.

The smartest insurtech players are able to leverage the power of sophisticated predictive data analytics to provide dynamic premiums based on real-time data and actual, rather than perceived or blanket risk which Nigerian insurance companies can adopt.

The challenges facing insurance companies are majorly the same across many African countries. There are cultural and religious beliefs that prevent people from holding an insurance policy. A good number of people also see insurance as a luxury that they cannot afford.

However, the next wave of digital transformation will go beyond connected devices and AI, to include technologies such as virtual reality, blockchain, big data analytics, voice, 3D printing and many more.

Smart devices and AI were singled out as offering up new opportunities to streamline operations and improve collaboration and asset-sharing between businesses.

Between 2016 and 2025, it’s expected to create up to $305 billion of value from increased profitability, as well as shift $100 billion in value from traditional players to newer, digital-savvy competitors, according to WEF.

There’s also the potential to drive wider benefits worth $700 billion from areas such as improved environmental sustainability, enhanced safety, and cost and time savings for customers.

One of the key characteristics that these emerging digital technologies share is in “connecting people with more information, people and experiences, more quickly than ever before,” according to a 2018 OECD report.

They offer a fantastic opportunity for online travel firms to build highly personalized experiences, delivering real-time information with which travellers can have the peace of mind to make key decisions on where to stay and what to do.

This personalization can extend into travel insurance, for which the market size is predicted to reach $35 billion by 2025. This sector is also undergoing radical digital transformation, producing innovative new platforms that could add tremendous value for OTA customers.

Some of the most interesting products are built around users’ mobile connectivity, geo-location, and APIs, AI and data analytics.

 

Local insurance companies such as NEM insurance, Leadway, AIICO insurance can leverage on technology to offer more insurance services to the teeming excluded individuals.

For example, innovative insurance distribution platforms leverage the power of APIs to slot neatly into travel providers’ sites, providing coverage for customers seamlessly at the point-of-purchase.

Even better, insurtech providers like Cover Genius offer customized policies dynamically bundled from a large pool of underwriters. Country, currency and language can all be personalized with geo-location — offering coverage for car rental, lost luggage, flight cancellations, and even mobile devices.

Geo-location capabilities can also be used to offer policyholders relevant add-ons and upgrades as their geographical whereabouts change.

The smartest insurtech players are able to leverage the power of sophisticated predictive data analytics to provide dynamic premiums based on real-time data and actual, rather than perceived or blanket risk.

This can save the insurer and policyholder money in the long run and further enhances the user experience, with quotes predicted, costed and seamlessly delivered direct to their personal device.

Local insurtech companies such as Compare IN, Cassava, Compare Guru and AutoGenious need to leverage more on the travel sector to scale further and grow their product and services.