THE DYNAMIC INSURTECH LANDSCAPE IN MIDDLE EAST: IMMINENT CHANGES AND TRENDS

By Arvind Kashyap, CEO, NewTech Insurance Brokers

As one of the oldest industries in the world, the insurance sector has weathered exponential global crises by constantly adapting to evolving consumer expectations and technological advancements. Over the years, the industry has succeeded in overcoming key bottlenecks such as lengthy paperwork, cumbersome processes, and limited customer interaction by embracing the power of digitisation. The adoption of InsurTech has revolutionised all aspects of the insurance value chain, from product development and underwriting to distribution and claims management.

The mass adoption of advanced technology such as artificial intelligence, data analytics, blockchain, and the Internet of Things (IoT) has facilitated seamless customer experiences, risk mitigation, and enhanced efficiency. With most Arab countries mandating health and motor insurance, the regional insurance market is flourishing, with the UAE market recording the highest penetration rate in the Gulf region. However, the penetration rate is still feeble when compared to the global standard, which hints at potential avenues of growth for the sector. About half of the region’s total Gross Written Premium (GWP) is attributed to health insurance, which is pegged to rise in 2024 and beyond, due to expatriate influx and burgeoning labour demand. Further, the UAE government will play a pivotal role in expediting health insurance adoption, with its strategic vision to double the economy’s size by 2031. The lucrative nature of the insurance sector as a market teeming with growth avenues, is attracting new and technologically savvy companies, who aim to reshape its landscape with their innovative strategies. These new players hold the power to usher in seminal changes akin to the ones brought about by the fintech revolution in banking.

According to a McKinsey report, the current InsurTech database is dominated by property and casualty insurance, followed by health insurance and life insurance. In the arena of pure risk insurance, InsurTech has developed robust access points to the value chain through innovation. The advent of cutting-edge technologies such as telematics and the Internet of Things (IoT), has facilitated product development across motor, home, and health insurance sectors, bolstering customer engagement and retention.

InsurTech is also attracting customers by incentivising riskminimising behaviours with the aid of smart devices that track car mileage, calories burned, in-home flood, or signal emergency services among others. InsurTech has also brought with it, an unprecedented opportunity to harness vital information in extensive data gathered from smart devices used in automobiles, home systems and wearables. This revolutionary change empowers insurers to provide accurate pricing, personalised offerings, and proactive risk management by harnessing the power of big data and predictive analytics, which reveal key insights about customer behaviours, preferences, and risks. As opposed to traditional insurance which fails to sustain customer engagement beyond the point of sales, technology enabled insurance solutions such as mobile applications, chatbots and personalised portals aid in improving customer retention and satisfaction. While effectively streamlining the purchase process, these tools also bolster ongoing communication, tailor recommendations, and expedite claims resolution, championing brand loyalty.

InsurTech startups are redefining the insurance landscape with a slew of flexible, innovative, and on-demand insurance options targeting underserved, niche, and minority segments. Amidst the clamour of InsurTech’s initial success, critical deterrents such as data privacy and cybersecurity concerns, regulatory hurdles, and resistance to change continue to dampen its pace of adoption by insurers. Moreover, one must also not forget the indispensable role of human interaction in the service sector. It is pertinent to seamlessly integrate automation and personalisation to tailor solutions that resonate with customers while ensuring success in the digital age. Despite the challenges, InsurTech continues to enhance customer experiences and innovate existing business models, ushering in a promising new era for the sector. Insurers need to consistently strive to overcome bottlenecks, leveraging technology to serve clients, while positioning themselves for success in a highly dynamic and competitive marketplace.