- Allianz Global Corporate (0.04 MB)
• The effects of globalization, digitalization and technological disruption pose fundamental challenges to many businesses
• The emergence of industry 4.0 could result in higher risk of large-scale losses
• Corporates operating in Africa have a particular role in embracing and responding to new technologies
Andreas Berger, Chief Regions & Markets Officer and Member of the Board of Management at Allianz Global Corporate & Specialty SE informed risk managers, insurance professionals, brokers and business leaders at the annual Insurance Conference in Sun City on July 26 that businesses operating on the continent face a wider range of disruptive forces in 2016 and beyond.
“The effects of globalization, digitalization and technological disruption pose fundamental challenges to many industries,” says Berger who was born in Rwanda. “The emergence of Internet of Things (IoT), smart factories, data analytics, artificial intelligence to name but a few could result in higher risk of large-scale losses due to increasing interconnectivity.”
Businesses based in Africa have a particular role in embracing and responding to new technologies compared to mature markets as there is an urgent and important need to grow their enterprises and economies rapidly. “They need to move with speed through the 3rd industrial revolution into the digital era, but need adequate policies and infrastructure to manage this transformation,” he says. “Businesses operating in the retail insurance sector have been particularly good at using mobile, digital and social media technology to provide simple and convenient products and sales channels and this is gradually increasing in the business to business arena as well. For example, future risk assessments in Africa by risk engineers will occur through new channels such as mobile insurance drones rather than on-site visits thus presenting the key to the future of business insurance through developing digital capabilities that address superior customer experience.
New risk transfer solutions required
However, he warned businesses that connected industries require new insurance solutions that will cater for emerging risks. “While frequency losses are expected to decrease due to predictive maintenance, there is a higher risk of large-scale losses due to increasing interconnectivity. In addition to this, there are new liability scenarios evolving as human error is being replaced by technical failure resulting in increasing importance of product liability.
Berger states that cyber vulnerability is another risk which companies are very concerned about. Attacks by hackers are becoming more target-oriented, lasting for longer and can trigger a continuous penetration. Cyber activity is at the top of long-term risks in Africa and around the globe.
Digital interconnectedness risks such as business interruption through non-malicious activity, physical damage following a non-malicous IT error, loss of intellectual property, and failure of utility services are risks that companies would like to insure against, but there is currently only limited insurance solution available in the market. “Insurers need to work with clients to consider the changing loss pattern and new emerging risks,” explains Berger. “There must be a review of insurance solutions and risk mitigation practices to reflect these new risk management realities. Refining existing and developing new risk services will be necessary by businesses and insurers.”
Embrace new technologies
The insurance industry should also consider the broader use of digital technology to improve customer experience and to create new risk transfer solutions for the digital economy. Insurance companies need to acclimatize to new business models and conduct advanced risk assessments through data analytics for new customer services. The internal transformation for insurance companies means that processes should be digitalized to increase quality and productivity and require a highly permeable non-silo structure that allows flow for skills and ideas.
For more information contact Lesiba Sethoga +27 11 214 7948 or email@example.com