Nigeria: Munich Re bets on automation to strengthen the insurance market – The Africa Report

Data Mining

By David WhitehousePosted on Thursday, 4 February 2021 02:21

Munich Re is banking on automated underwriting as a key to unlocking Nigerias insurance market as it rolls out its service in West Africa for the first time.

The reinsurer has supplied its automated underwriting to an unnamed South African insurer that has expanded into Nigeria, says Paul Donnelly, executive vice-president for Europe, the Middle East and Africa at Munich Re Automation Solutions in Dublin. It will be technically feasible for the service be up and running this year, subject to the final decision of the unnamed client, he adds.

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Donnelly argues that automation and the use of artificial intelligence (AI) makes underwriting decisions fairer and more efficient. The technique is suited to African markets, many of which lack capability and an insurance culture, he says. The technology can do some of the heavy work.

In South Africa, Munich Re counts Sanlam, Old Mutual and Liberty among its clients, and also has a corporate customer in Egypt.

But in less-developed African markets, the data used to feed its machine learning may not exist. That leads to an element of flying blind, Donnelly says.

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Data is key to making decisions in insurance. A white paper from Munich Re gives the example of diabetes, a medical condition that sets off alarm bells for life insurers and can lead to extensive checks.

Automated systems relying on AI are only as good as the data with which they are fed. The South African market, as Donnelly notes, is similar in terms of depth to Europe and Asia.

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However, Nigeria has one of the worlds lowest rates of insurance penetration, and the market is dominated by mandatory third-party car policies. Cultural resistance among customers and the difficulty of establishing cost-effective sales are among the reasons for the weak market. That suggests gathering customer data will be an uphill struggle.

Automated underwriting in Nigeria has everything to prove in the face of obstacles in data collection that have not been encountered in South Africa.

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Nigeria: Munich Re bets on automation to strengthen the insurance market - The Africa Report

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