Delivered by Simon S. Price CEO DIFC Insurance Association
The speech below was given May 30th, 2023, Dubai by Simon S Price. It was the Keynote Address at the third edition of the Future of Insurance 2023 event. This event was highly anticipated and widely attended and concluded on May 30 with immense success. The event brought together thought leaders, industry experts, policymakers, and stakeholders to engage in dynamic discussions, address challenges, and explore opportunities shaping the insurance sector.
To learn more about the event please follow the following link:
Good morning, it’s a real privilege to be here today to give this keynote address, I would like to thank the Khaleej Times and all the sponsors for making this event possible.
There are many macro and micro challenges we are facing in our industry, whether it be geopolitical or the investment markets or the rising cost of living. I still feel there are many reasons to be optimistic about the UAE insurance market.
Its widely reported that the insurance penetration rates are low, they have remained low for a long period of time with little upward movement. Comparing the UAE market to other markets that are domestic with significantly lower levels of expatriates may not be the best KPI’s. And what would be an appropriate level of penetration for such a unique country is difficult to determine.
The reason I’m optimistic is that I see more people coming here, they are staying longer and more people are establishing their business activity here.
Looking at sources on population numbers, we are around 10 million which is up 1 million from 2020. We see the streets are busier, rentals are higher and restaurants are full. If I look at the DEWS (End of Service Benefit Scheme in the DIFC) this is now covering over 4,300 businesses, up from about 2,200 from launch 3 years ago.
People are staying longer; I see stats saying the average length of stay for an expatriate here is over 15 years.
We know there are many challenges in the market but the demand and need for insurance services are continuing to increase.
In order to match this demand with insurance services technology will play a key part.
I think it was “Peter Drucker” who said; “Your assets of today will become your liabilities of tomorrow”. When I started in the industry in the early 2000’s we were all excited by greenscreen admin systems, now they are legacy and classed as technical debt. Your cutting edge technology of today at some point will become legacy systems of tomorrow.
Change is a constant and we need to evolve with the market, evolve with the available technology and keep striving to fulfill the customer demand.
When I think about technology & innovation in insurance. I believe is creates 5 main business outcomes, namely:
- Increase revenue.
- Improve customer experience (CX).
- Reduce costs through efficiency.
- Enable greater compliance.
- Help manage risk.
In my experience most innovations are great if they do one of these things, very rare if they achieve 2 and probably not true if you get more. Looking at where the market has been investing I would like to comment on each of these areas of change.
Technology can help in creating more access points to customers. In recent times we have seen many insurers understanding that they need to play in other people’s ecosystems. Whether this be via banks or comparison websites etc. The owners of these ecosystems will want to control their environment and CX. What has become clear is that customers are not always willing to buy your services through the insurer’s native environment.
We have seen significant use of API’s to help enable this transition, and I only see this trend continuing and will be essential for this next leap. Insurers are continually looking for more opportunities to play in as many relevant ecosystems as possible.
We are seeing players talking about embedded insurance and we are seeing the like of Emirates Airlines using their ecosystem to embed insurance offerings and I only see this proliferating into the future.
We have also seen more awareness of insurance in the workplace, driven by governmental initiatives about ILOE and end of service benefit reforms. The DEWS scheme in the DIFC has raised the awareness of EOSB to employees. I can see the workplace employee benefits conversation being very important to the industry.
Improve Customer Experience
Insurers need to be clear on the customer expectation of interactions and it is not consistent by product line. A quantum exists, on one end you have transactional (commodity) type of insurance like motor, where the customer is expecting a 100% digital process. But as the premium or risks become more significant the demand for face-to-face interaction also increases. For example, if you are looking at life insurance and looking to plan inter-generational transfer of wealth, I think customers want face to face advice and not just interact digitally.
We also see in digital journeys, the actual decision-making process will normally come offline. Customers will come out of a digital journey, get advice from friends or family, and then go back online to complete the purchase.
So, you need to understand in what part of the quantum you are by product line and meet the appropriate expectation. However, recognise that digital is not always the answer and better understanding of the online and offline processes that customers do will lead to greater gains in better CX.
One other trend is that when you digitize processes the need for better quality voice becomes essential. When customers need to call, they will now be asking more complex and in-depth questions than before. So, ensuring that voice capabilities are upskilled in line with your digital transformation is key, I think the banking sector has taken some great strides in this space.
And let’s not forget the “paper”, customers do love a policy document, something they can put their hands on when they need it.
I think most companies in the UAE are embarking on this journey in one way or another, it is a path that’s essential. I can only see further enhancements in this space, and as things like AI become more common place im sure we will see some great innovations in CX in the insurance sector.
Reduce costs through efficiency.
We have seen expense ratios for the UAE market increase recently. Compounding this with rising costs of living and general inflation the need to be more efficient is only growing. Companies need to continue to focus on opportunities to use technology to reduce unit costs and ultimately continue to offer attractive premiums for their products.
Companies need to keep refining their models and investing the technology that genuinely leads to cost reductions to customers.
From my days of LEAN training – “if a customer saw you doing it would that be happy to pay for it”. If the answer to this is a “no” then you need to find a way to stop doing it or minimize the costs.
There is always a huge focus on operating processes under the COO and there will be opportunities. I recently updated my Etisalat contract and used the UAE Pass to update my KYC, it was a seamless process and driven over the app via API’s. We have national and digital ID in the UAE. We should ensure we leverage these data repositories to create efficiency gains.
However, it’s not just ops that need to be efficient. Other parts of the organization need to follow suit. Your finance team needs to be able to report, value and enable performance management without too much effort. Your HR teams needs to perform payroll with ease etc etc
These gains across all departments are critical. But as you deploy more technology, being clear about the overall IT architecture of the organisation become critical.
Enable greater compliance.
The burden of compliance is only increasing. We have recently seen things like VAT and corporate income tax. IFRS 17 will be challenging for many players, increasing requirements on data handling, sustainability reporting to name a few.
The demand for further disclosure from investors, regulators, customers, and the community is increasing. We have seen the recent impact in “trust” in the banking sector in the US and insurers are non-immune to similar scenarios. So we will be asked to explain more about our organizations and what risks are we accepting.
I fundamentally feel that throwing people and spreadsheets won’t solve this burden issue. Companies need to be smart in their architecture to help minimize the cost of compliance while maintaining high standards of disclosure.
Help manage risks.
Data can give us significant insights into risk assessment. However, we need to be mindful of the scale of the market in which we play. There is only so much insurance happening in the UAE.
Outside of motor, and maybe some medical lines, there is unlikely not enough data in the market to make this statistically relevant. I do ask myself “How big is the big in Big data?”, it’s likely to be a lot larger than what’s out there. So for now we will still need to leverage global data sets, however using local data sets to “localize” the larger global data sets will be important.
We are seeing significant investment into data on customer behaviour, and this could represent a big leap. However, we need to be mindful of things like GDPR and reputation issues around some forms of data collection.
In summary, I think huge leaps are being made in enabling customer access and CX, but I feel more focus on efficiency and compliance is required.
One final point. Technology is always about people, the biggest barrier to change is not the tech. The challenge is helping organisations to create enough space to focus on change and getting the right people to enable it. Change is a key strategic endeavor and should be held at the executive c-suite level and not buried in an IT or ops department.
In times of change, the business that adapts the best will be the winner.
I’m excited about this next cycle and optimistic to see what change will happen in the UAE market.
On that note, I would like to thank you for your time and I look forward to the conference ahead.