RESERVE Bank of Zimbabwe Monetary Policy Committee member and Bullion Group International founder Persistence Gwanyanya has encouraged the insurance and pension industry to create value amid hyperinflationary losses.
Over the years, the industry has recorded massive losses tied to the volatile exchange rates from the use of domestic currencies.
The first such bout was the 2008/09 hyperinflationary period.
However, these periods have led to the public mistrusting the industry.
Consequently, the Insurance and Pensions Commission set up a compensation programme to force industry players to come up with plans to compensate pensioners and insurance policyholders for the 2008/09 hyperinflationary period.
Giving the keynote address during the Insurance Institute of Zimbabwe annual conference in Victoria Falls, earlier this week, Gwanyanya said compensation only was not enough, adding that there needed to be value creation.
He said this then made innovation a key driver.
“More than ever and also for the ever-evolving insurance industry, the insurance industry is undergoing rapid transformation, driven by a combination of technological advancement, changing customer expectations and evolving risk landscapes” Gwanyanya said.
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“But, as we navigate the environment and as we seek to sustainably grow the industry and also as we seek to change the perception, the negative perception about our industry, occasioned by the losses suffered by the market on account of hyperinflation, it is hard to ignore innovation as a key driver to value creation. It is only creation of value that can salvage us as an industry.”
He said it was only the creation of value that could help change perceptions, the generational myth that had condemned the industry for the losses of value in the past.
“Justice Smith did an enquiry into the losses that were suffered on account of hyperinflation prior to 2019 and established that the pensioners and policyholders need to be compensated for the value lost,” Gwanyanya said.
“But it’s not only compensation, which is enough, but going forward, there is need to ensure that we create value for our stakeholders so we endear ourselves, we change our perception with the stakeholders.
“So, this makes innovation a key driver to value creation. And we have seen recently the growing reliance on pivoting of the market on innovative solutions.”
He said the growth of artificial intelligence, the internet of things (IoT), blockchain technology and big data analytics, was area which the insurance industry should capitalise on for value creation.
This is because artificial intelligence and machine learning can improve underwriting, claims processing, fraud detection and customer experience.
Similarly, Gwanyanya added that there was increasing reliance on the IoT to generate vast amounts of data and assess risks more accurately and develop tailor-made insurance products.
Blockchain technology, he said, was also increasingly growing in importance as businesses tried to streamline their processes, improve transparency and reduce fraud.
“Importantly, reliance on big data to enable insurers gain invaluable insights from large data sets and lead to better decision-making and risk management is becoming a game-changer, all in the name of value creation,” he said.
“So, the underlying is the need to create value. But, as we try to create value, we are aware of the changing customer expectations. The customer expectations are evolving. But, as these expectations are evolving, we must also measure up to the emerging requirements of the market.”
He said this was why digital transformation and the growth of personalised products, real-time interactions, were gaining growing significance in the insurance industry.
“So, we need to develop, to grow with the changes or the changing demands in the marketplace,” Gwanyanya added.
He said there was an urgent need to respond to increasing demands for tailor-made insurance products and meet specific needs and lifestyles of the market being served.
But, more importantly, he added, real-time interactions were expected to deliver quick responses to customer services often through digital channels.
“It is important to underscore the effect of the evolving risk landscape. The business is all about risk management. But as risk is evolving, characterised or typified by climate change, growing cybersecurity issues, as has been mentioned by the commissioner and emerging risks, there is a need for us to urgently respond to these issues,” Gwanyanya said.
“Insurers are called upon today to adopt the increased risks associated with climate change, such as natural disasters and extreme weather conditions.”
The conference was being held under the theme Innovation an Impetus to Insurance Growth and Sustainability.
