HomeOpinion & AnalysisHow e-commerce can transform Zim’s insurance sector

How e-commerce can transform Zim’s insurance sector

BY MELODY CHIKONO
THE Covid – 19 outbreak in China at the end of 2019 has resulted in governments implementing worldwide hard lockdowns, which have reshaped the way businesses operate and how people live.

Most businesses have spent the better part of the past year closed, or being forced to operate on reduced scale to prevent contagion, which has led to the death of millions worldwide.

In Zimbabwe, only businesses classified as ‘essential services’ have been allowed to operate throughout the hard lockdown regimes that has seen many corporate casualties.

In April, a World Bank report said up to 500 000 Zimbabweans had lost their sources of income since the explosion of the killer virus, which has not spared lives in the southern African country.

The ‘new normal’, has seen industry, commerce and consumers shifting to digital platforms to conduct trade, with many services now being offered through the internet.

Thanks to the rapid development of digital platforms in the past few decades, the world has been able to address a potentially serious problems that could have affected humanity during the era of the pandemic – the ability to buy food, continue company operations and even buy medicines from people’s homes using digital platforms.

This transition raised e-commerce’s share of global retail trade from 14% in 2019 to about 17% in 2020, according to the United Nations (UN), in a report on Covid – 19 trends and e-Commerce development.

The report said the trends reflected powerful global and regional transformations recorded throughout last year.

Governments have been prioritising the implementation of digital infrastructure and providing relief funds for businesses, drafting and reviewing legislation and policies to create conducive and secure e-commerce ecosystems, the UN said in the report.

On another front, the pandemic certainly brought an array of uncertainties that the country’s insurance sector was not totally prepared for.

However, the uncertainty has ushered in a whole new dimension of digitalisation at an accelerated pace in response to the challenges posed by the pandemic in terms of business operations and product development, according to Zimbabwean insurance sector experts.

They said significant growth has been registered for businesses taking advantage of digital systems and e-commerce networks, thus the insurance sector naturally cannot ignore e-commerce as the business environment evolves rapidly from traditional channels to swift solutions driven by disruptive technologies.

For the sector, e-commerce has opened a whole new dimension of threats in the form of cyber risks spanning from cyber-attacks and more sophisticated digital fraud and skills as well as knowledge gaps that still need to be bridged in order to handle emerging threats.

Experts say this development calls for an upgrade of skills and training to handle these emerging and changing risks.

they contend that that the full adoption of e-commerce is long overdue as a game changer for the insurance sector.

This is expected to help increase coverage, acquisition of new customers, new policy uptakes, request for quotations and the processing of claims.

Digital platforms will also help the industry create databases for the benefit of all players and policy holders.

Insurance Council of Zimbabwe chief executive officer, Tendai Karonga recently told Weekly Digest in Harare that at the height of the pandemic most business did not operate on the e-commerce platforms leading to a rush to develop online trading system.

He said banks were well placed to operate under the new normal, ahead of the majority of sectors, due to the rapid developments that have been taking place in the sector.

“A limited range of insurance products were available online mainly motor and domestic insurance,” Karonga said.

“The absence of online systems resulted in the inability to process even the simplest of claims. Lack of resources to operate remote digital service systems that include providing employees with gadgets and systems to work from home was also noted.”  Karonga said.

He, however, said provision of an efficient e-commerce service in Zimbabwe was being hindered by expensive data, unreliable connectivity, inadequate infrastructure for a wider outreach and culture of resistance to online trading.

But  e-commerce is not only an opportunity but a solution in this uncertain environment, as it ensures that the sector continues to provide the much-needed service to customers with minimal disruptions.

Head of Life and Health at Emeritus RE Clementine Chinyuku believes embracing e-commerce therefore is not a choice but a must for the insurance sector to remain relevant and viable.

Chinyuku told Weekly Digest that e-commerce further provides unparalleled opportunities in data use and management for product development and business processes providing efficiencies in underwriting and claims management while streamlining activities and reducing operational costs.

This results in insurance sector players boosting operating profits.

“As the world continues to digitalise albeit at various levels, the insurance sector is no exception and just like any business adaption and agility are necessities not only for survival but for the sector to thrive and succeed in this highly competitive environment,” Chinyuku said.

“The insurance sector naturally cannot ignore e-commerce as the business environment evolves rapidly from traditional channels to swift solutions driven by disruptive technologies. On the other hand, the customer demographics have gravitated towards the more tech savvy customer with access to sophisticated technologies and escalating expectations, which include convenience, simplicity, and efficiency,” she added.

The new uncertainties have recently seen a new drive by the sector to rise from it’s comfort zone, where e-commerce adaptation was at a relaxed pace to more serious development.

An economic analyst Victor Bhoroma told Weekly digest that the insurance sector was very key in the face of crises such as Covid – 19 for building household and business resilience, as well as supporting capital markets stability.

Thus, Bhoroma said, as the pandemic brings risks of death, loss of income, business closure, decline in sales or losses, risk transfer and management were critical to developing nations such as Zimbabwe.

He said the insurance sector was important for pooling capital and allocating it to support retooling and business survival.

“I think it’s (e-commerce) long overdue and game changing for the insurance sector. It will help increase coverage, acquire new customers, purchase policies, view cover, get quotations and reports, and process claims and create databases for the benefit of all players and policy holders. But key gaps exist on security for policy holders and their privileged data from hackers and fraudsters. Equally important are software issues to do with backup and data storage, access to internet, KYC and speed of processing to help policy holders,” he said

As with any innovation, there are some gaps that may be experienced in the teething stages and learning cycle of implementation more-so as the implementation had to be fast tracked.

Chinyuku said there existed legislative gaps on management and handling customer data and these needed to be addressed to ensure compliance with various administrative frameworks to provide adequate protection to all parties concerned.

She added that one of the gaps that needed to be continually monitored is adequate and up to date software and hardware that augments the E-commerce objectives adding that there is need for robust business systems that support digitalisation and the insurance sector must not

lag the rapid changes in the digital space for the E-commerce solutions to remain relevant.

Karonga however noted that the sector had increased its investment in the development of online and real-time business operating systems whose demand by consumers accelerated due to the pandemic lockdowns.

Insurance companies are now relying on various firewalls and internal information security systems to protect policyholder information.

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