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Startups are set to disrupt the insurance business model fundamentally, says Stanley Gabriel, head of innovation at Old Mutual Personal Finance.
Gabriel was responding to a question from Ventureburn on big trends he sees in the sector that startups should look out for. His comments follow the announcement last week by Johannesburg based insuretech startup Pineapple of a R5.2-million funding round from Lireas Holdings.
“I am excited about these developments and believe that the future lies in open innovation. We will see a rise in partnerships, not just in insurtech or fintech, but potentially with other financial institutions and retailers. The insurance industry is going to feel the biggest impact in the coming years,” he said.
Time is ripe for startups like Pineapple to disrupt insurance says Old Mutual manager
Gabriel said with customer needs changing and becoming more sophisticated, a key trend in insurance is likely to be a big focus on customer engagement and experience. Big data and behavioural economics are key to enabling and powering this change, he said.
Another key trend that represents huge opportunity, he said, is providing mechanisms to digitise processes that are currently manual, expensive and time consuming. “We also expect to see more insurers using robo-processing and introducing forms of robo-advisers,” he added.
“The exciting part will be how traditional distribution channels introduce technology to deliver advice to their customers and remain relevant, especially with the Retail Distribution Review fast approaching,” he said. The review aims to improve disclosure to clients and mitigate certain conflicts of interest.
Gabriel pointed to the 2015 World Economic Forum (WEF) report (opens as PDF) on the future of financial services. “The most imminent effects of disruption will be felt in the banking sector; however, the greatest impact of disruption is likely to be felt in the insurance sector,” he cautioned.
Old Mutual Emerging Markets has partnered with Startupbootcamp Insurtech London and Startupbootcamp Cape Town (which kicks off today), which have accelerator programmes that connect startups, corporates and investors.