Africa Re: The case for blockchain technology in the African insurance industry
Executive summary :
Over the years, the insurance industry has been one of the late adopters of technology across its value chain. However, this has improved in the recent past with the proliferation of insurtech initiatives in different parts of the world including Africa.
Technology will shape insurance
There is a growing consensus among industry stakeholders that technology is one of the dominant forces that will shape the future of the industry considering the myriad of challenges begging for answers particularly high expense ratios and operational costs which have led to increasing pressure on profit margins.
Necessity, not a luxury
Today, the adoption of technology is no longer a luxury but a necessary business enabler across different industries and the insurance industry is not an exception. One of the technologies expected to bring significant value proposition to the insurance industry is blockchain/distributed ledger technology (DLT).
Insurance must embrace change
The insurance industry has not yet been fully disrupted as the sector moves and evolves very slowly. Although the reinsurance sector has witnessed continued technological advancement, there has been little or no change in its core operating model. There is a growing acknowledgement that the insurance industry is at an inflexion point and that digitisation/technology needs to be embraced to respond to the challenges at hand.
Blockchain has captured the imagination
In Africa, some of the issues of utmost concern to reinsurers are the high outstanding cedant balances, evolving regulatory environment, volatility of results and a very competitive marketplace. Different companies and industry initiatives worldwide are exploring the business potential of blockchain /DLT technology across the (re)insurance value chain.
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