Gerdus Dixon - KPMG : Evolve - The 2017 KPMG south African Industry Insurance Survey
Gerdus Dixon - KPMG : Evolve - The 2017 KPMG south African Industry Insurance Survey

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Gerdus Dixon - KPMG : Evolve - The 2017 KPMG south African Industry Insurance Survey


"At some point in your life, if you're lucky, you get to design the way in which things evolve." - Daniel Day-Lewis

The 2017 edition of the annual KPMG Insurance Survey has revealed that the South African economy has made growth in the insurance industry a sought-after commodity. Premium rate increases to the customer are met with much resistance due to affordability constraints and, with the many digital platforms available, the customer can easily and quickly shop around for more competitive quotes and change its insurance provider in a few easy steps.

Today's leading financial services companies are operating in a new and more complex environment, one where the fundamental definition of how customers experience and interact with an insurer is being challenged and redefined. This is further complicated by millennials' dramatically different buying patterns, alternate channels and changing expectations for consumer and digital experiences. This new consumer-driven business model is one that many insurers recognise and are striving to adopt in order to win and retain customers.

Insofar as short term industry results are concerned, statistics indicate that South Africa's overall GDP grew by 0.3% in 2016. This is lower than the growth of 1.3% reported in 2015. Even though the main contributors to the low GDP growth was the mining and quarrying industry, and the manufacturing industry, the tough trading conditions are clearly reflected in the 2016 financial results reported by the short-term insurance industry.

Growth in the industry is being hindered by unfavourable macro-economic factors, weather related disruptions and shrinking disposable household income due to increasing unemployment rates and increased inflation. In addition, the industry reported gross written premiums of R92.1 billion in 2016, an increase of 4.2% when compared to the R88.4 billion written in 2015.

"When we cross over to address the role of disruptive technologies in Financial Services, millennials pop into my mind because they are the end user and the driving force of this disruptive culture. This group grew up in a digital media saturated world, thus they are often characterised as being technologically savvy, resourceful with information and captivated by instant gratification," says Gerdus Dixon, Partner and National Head of Insurance at KPMG South Africa.

Most millennials are between 22 and 36 years of age and they constitute 33% of the population within South Africa. In 2013, the spending power for this generation was approximately R2 billion. It can be assumed that this will increase as these individuals mature. Their early experiences with technology, having copious amounts of real-time information available to them and being shaped by convenience has influenced their behaviours, opinions and choices on which products and services to use. 

This, in itself, should coerce businesses of today to prioritise customer experience on the business agenda, enhance their product solutions, improve service levels and enable various channels of interaction with their consumers.

The fourth industrial revolution is here, being driven by the rapid introduction of diverse and disruptive technologies, creating enormous opportunities for both new and existing businesses. The South African insurance industry landscape is well developed and competitive, which places more pressure on insurers to find innovative methods to differentiate themselves in order to maintain or grow market share.

Insurance organisations are therefore faced with the conundrum of how to better adapt their service offerings to support an optimal go-to market strategy for this particular customer segment in order to reduce churn and gain a competitive advantage.

Gerdus Dixon - KPMG : Evolve - The 2017 KPMG south African Industry Insurance Survey

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