Due to the increasing utilization and potential of artificial intelligence in financial services, there are numerous concerns about integrating it into crucial operations of insurance companies. The perspectives of the Nigerian insurance industry, among others, are crucial in determining the acceptance and commercialization of this technology. However, the industry is gaining traction due to factors like a growing youth population, higher smartphone usage, accessible internet, and the emergence of insurfintech applications, G.U CHUKWU writes
Over the years, stakeholders in the insurance industry in Nigeria have expressed concerns about how AI technology could enhance the sale and distribution of insurance products in the country. It is widely known among insurance industry professionals that brokers control approximately 80 percent of the market, while other agents and salespersons make up only 20 percent. These concerns were particularly heightened due to analysts’ observations that the Nigerian insurance industry has not performed well in recent years due to a lack of aggressive marketing strategies. Mr. Muftau Oyegunle, who’s the President/Chairman of the Chartered Insurance Institute of Nigeria (CIIN), addressed these concerns at the Insurance Directors’ Conference in Lagos. He emphasized in 2021the necessity for professionals to acquire specialized skills in response to the increasing digitization of the industry. Oyegunle also emphasized the significance of discussing the impact of artificial intelligence on the insurance industry, as it plays a substantial role in the evolving world of insurance. Haj. Thaibat Adeniran, the Managing Director of Hilal Takaful Nigeria Limited, further emphasized the transformative potential of emerging technologies like artificial intelligence, the Internet of Things, and robotics in the insurance industry. She explained how these technologies can enhance various processes within the industry, including risk management, underwriting, claims, and sales.
While Oyegunle and Adeniran expressed their views at different times, with Adeniran expressing hers last year, it appears that the issue has now been resolved, and recent efforts are being made to accelerate growth. A recent survey conducted by Continental Re. Plc, a pan-African reinsurer, reveals that the utilization of Smart AI chatbots, blockchain technology, and open-source data are among the top five technology trends that are expected to have an impact on businesses not only in Nigeria but also across Africa by the end of the decade. The survey also indicates that the insurance industry is generally positive about emerging technologies, with over 38% of respondents seeing technology as a significant opportunity for their businesses in the next five years. According to the survey of CEOs, 54% of them believe that investing in start-ups is the most promising approach, compared to 32% who consider Foreign Direct Investment (FDI) necessary for technological development in Africa.
Around one-third of CEOs from Africa’s top insurance companies who took part in the survey intend to allocate 3-5% of their revenue to invest in various technologies like smart AI chatbots, robotics, and clean tech. This investment has the potential to exceed $1 billion, they say. Lawrence Nazare, the Group Managing Director of Continental Reinsurance, supports the survey’s findings and believes that embracing and advancing future technologies present Africa with an opportunity to decrease its reliance on aid and become a significant global partner, as demonstrated by the challenges brought about by Covid-19. Collaboration among the 54 African nations and its demographic advantage as the world’s most populous and youngest continent are also viewed as catalysts for growth in the technology sector.
According to 45% of the respondents, Pan-Africanism is seen as crucial for the success of technology start-ups, aligning with the goals of the African Union’s Agenda 2063. On the other hand, 41% prefer to improve the skills of the current workforce, while 38% believe that promoting STEM skills in schools and the education system is essential for future success. They believe that the integration of AI in the Nigerian insurance industry has been gradual, with insurers initially focusing on automating routine tasks and back-office operations. However, with advancements in technology and increased availability of data, AI has been incorporated into various aspects of insurance operations such as risk assessment, fraud detection, customer engagement, and product innovation.
Analysts emphasize that by leveraging AI, insurance companies in Nigeria enhance efficiency, reduce costs, and provide a more personalized experience to policyholders. AI technology enables automation of underwriting and policy management processes, faster claims processing, improved customer service through chatbot assistance, and advanced data analytics for predictive modeling. They say this given that the insurance market in Africa is projected to grow at a rate of 7% per year until 2028, reaching a value of $120 billion. Nonetheless, traditional insurers face challenges as their products are often considered inferior compared to global standards.
Conversely, the industry is gaining momentum due to factors such as a growing young population, increased smartphone usage, affordable internet access, and the rise of fintech apps. In response, insurtech startups are emerging and targeting different customer segments to increase market penetration. Recently, MyCover.ai, a Nigerian-based solution, secured $1.25 million in pre-seed funding to expand its operations. Experts acknowledge the potential for closer collaboration among African countries as they shift their focus to a pan-African market position. This significant achievement represents progress towards greater self-reliance and highlights the transformative impact of collective efforts in advancing emerging technologies in Africa. This seems to be in line with the survey conducted during Continental Reinsurance’s CEO Summit that is in line with the 2030 Agenda and demonstrates how the results surpass the goals outlined in the agenda for sustainable development in terms of technology adoption.
For Curacel, a company based in Nigeria, it utilizes artificial intelligence to streamline the processing of claims and identify fraudulent claims for health insurance companies. Recently selected for the Startupbootcamp AfriTech accelerator program, Curacel offers a web application to health insurance companies for collecting, processing, and paying health claims. Their services aim to reduce fraudulent activities related to health insurance, such as claims padding and vetting errors, by flagging suspicious claims, validating claims, and cutting down on other forms of fraud. Research conducted on national health insurance schemes in Africa has revealed that 15 to 20% of healthcare spending is lost due to fraud, and Curacel is determined to address this problem.
Similarly, Leadway Assurance, a company focused on insurance, has incorporated artificial intelligence into their vehicle assessment process through the use of their tool called “Leadway VehiScanner”. This AI-enabled tool, accessible on mobile devices, revolutionizes the vehicle assessment process by allowing users to scan vehicles, identify damages, facilitate pre and post-loss inspections, obtain instant inspection reports, and accelerate claims requests for policyholders. Tunde Hassan-Odukale, the CEO of Leadway Assurance, emphasizes their commitment to employing innovative solutions that enhance the customer experience and simplify claims payment processes. The Leadway VehiScannerAI eliminates the need for policyholders to physically visit inspection centers, as it enables comprehensive inspections to be performed remotely and conveniently via mobile phones, providing immediate results and highlighting areas that require attention.
During a media conversation with co-founder and CEO Adebowale Banjo of MyCover.ai, he stated that their goal is not just to gain a significant share in the market, but to also increase the overall size of the insurance industry by introducing innovative products and improving distribution. According to the source, MyCover.ai offers an open insurance API that allows businesses to incorporate insurance into their existing products and services, with a focus on addressing challenges, not only in Nigeria, but also in Africa’s insurance market.
In their own words, they have integrated their API with several insurance companies, such as Hygeia, Leadway, Sovereign Trust, AIICO Insurance, and Allianz. This enables them to streamline the claims process for these companies and their end users, including fintechs, proptechs, e-commerce companies, telcos, logistics and ride-hailing platforms, and BNPL platforms. These platforms have the option to choose from a range of personalized insurance products to embed into their services.
For example, they continued, saying that a third-party logistics platform can offer on-demand coverage for goods in transit and provide health insurance and personal accident coverage for riders. They affirm that the National Insurance Commission (NAICOM) has reported that only 0.5% of Nigeria’s population is currently covered by insurance, leaving the majority of people without coverage and relying on personal funds in emergencies.
Notwithstanding, to address this issue, MyCover.ai says it has created a B2B platform called MyCoverGenius, which allows entrepreneurs and small businesses to purchase insurance products from the startup to cover their staff and assets. The platform offers various insurance options starting at $2 (₦1,500) per month. Since its launch, MyCover.ai claims to have generated over $1 million in gross written premiums through partnerships with 30 insurance distributors across the country.
Banjo, who previously worked as the head of business development at MallforAfrica, also revealed that MyCover.ai is currently in talks with around 50 other distributors and has processed over 50,000 policies for over 30,000 end users. The CEO stated that the insurtech platform’s revenue doubled in 2022 compared to the previous year, and they aim to achieve the same level of growth by the end of this year. With this, pundits believe that Artificial Intelligence (AI) has the potential to revolutionize the Nigerian insurance sector by analyzing data, automating processes, and making intelligent decisions.
They refer to AI as computer systems that can perform tasks requiring human intelligence, and it currently plays a crucial role in streamlining processes, enhancing customer experiences, and improving decision-making in the insurance sector. In fraud detection and prevention, AI can analyze large amounts of data to identify suspicious patterns and alert insurers in real-time. Juxtaposing to that, Nigerian insurance companies are recognizing the potential of AI and embracing its applications to improve efficiency and provide a personalized experience to policyholders.
Those who know better say that AI technology enables insurers to automate underwriting and policy management processes, expedite claims processing, enhance customer service through chatbot assistance, and use advanced data analytics for predictive modeling. It is believed that the industry will embrace this initiative easily, as computers have become faster, cheaper, and more accessible since 1957-1974, and machine learning algorithms have improved. Early demonstrations of AI’s potential also showed promise in problem-solving and language interpretation.
*Chukwu writes from Imo State.