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The insurance industry is a vital pillar of the South African economy, with an estimated market size of R4.769 trillion (251 billion USD) in assets as of 2021, itself an increase of around R570 billion (30 billion USD) from the previous year. Overall, the value of assets of insurance companies in South Africa has grown by approximately R3.8 trillion (200 billion USD) since 2002.
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However, the industry has struggled to digitize effectively. As the world increasingly embraces digital transformation, it's crucial for insurance companies to adopt innovative solutions – such as automated withdrawals– to stay relevant and competitive.
For those companies that embrace them, digital payments are proving transformative in the insurance industry, providing numerous benefits across the board.
Here are a few ways that digital payments can impact the insurance sector.
Collections
Life insurance is a critical component of financial planning, with over 10 million policies in force in South Africa as of 2017.
Digital payments can streamline premium collection, making it easier for customers to stay up to date on their payments. This, in turn, reduces policy lapses and improves customer retention rates. According to a study by McKinsey & Company, digitizing life insurance operations can lead to a 15-20% reduction in operational costs.
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Health insurance
Health insurance is an essential service that provides financial protection against medical expenses. It’s one of the fastest-growing segments in the South African insurance market, driven by increasing healthcare costs and a growing middle class.
By adopting automated withdrawals, health insurers can simplify the claims process, ensuring policyholders receive timely reimbursements for medical expenses. A survey conducted by PwC found that 50% of insurance customers would prefer a fully automated claims process – digital payments offer an ideal path to achieving this.
Motor insurance
Motor insurance is a mandatory requirement for all vehicle owners in South Africa. With over 12 million registered vehicles on the roads, there is a significant demand for efficient and easy-to-use motor insurance services. Digital payments can expedite claim settlements, allowing customers to receive payouts quickly and get back on the road sooner.
According to a study by EY, 40% of customers would be willing to switch insurers if they offered better digital experiences, including seamless payment options.
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Property insurance
Property insurance protects homeowners and businesses from financial losses caused by damage or theft. By implementing digital payments, property insurers can streamline the claims process, enabling customers to receive payouts faster and more efficiently. In addition, digital payments can help insurers reduce fraudulent claims, which accounted for 32% of total claims in South Africa in 2019, according to the South African Insurance Association (SAIA).
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Travel insurance
Travel insurance is a crucial safety net for millions of South African tourists traveling abroad each year. This mirrors the global appetite for travel insurance: In 2021, the market for travel insurance was valued at more than R318 billion (17.58 billion USD).
With the rise of online booking platforms and increased global connectivity, the demand for digital payment solutions in the travel insurance sector is higher than ever. By integrating digital payments into their offerings, travel insurers can provide a seamless experience for customers, from purchasing policies to submitting claims and receiving payouts.
The future of insurance innovation
The adoption of digital payments in the insurance industry is not only a necessity; it represents a unique opportunity for growth and innovation. As the statistics show, there’s a significant demand for digital payment solutions across various segments of the insurance sector in South Africa.
Ozow’s innovative solutions provide an ideal example of the value that digital payment solutions can offer insurers. Acting as a total solution for payouts, billing, and payment analytics, it allows insurers to streamline their operations, enhance security, and ultimately provide a superior customer experience. Ozow also ensures that merchants – insurers or otherwise – have access to every South African with a bank account, expanding their reach.
It's time for insurers to seize the opportunity and revolutionise the way they do business.
