Insurance in the ‘new normal’

Like many businesses, insurance companies are facing unique challenges in the rapidly evolving post-pandemic environment. The head of sales, distribution and marketing at Liberty Life Namibia, Warren Kozonguizi, shares the group’s new approach to business.

14 April 2021 | Business

The new normal in insurance is centred around technology.

B7: Tell us about your life in Namibia: where you were born, your childhood and early years as a young adult.

WK: I was born and raised in Windhoek and completed my initial qualification in computer science and economics at the University of Namibia.

I held a couple of junior positions at local telecommunications companies and state-owned enterprises (SOEs) until I got the opportunity to represent Namibia on the international stage in Shanghai in China with the ministry of regional government and housing. Through the various engagements and networks I developed within my tenure in China, I managed to secure a position in Luanda in Angola as a pre-sales engineer for Internet Technologies Angola from 2010 until 2015.

B7: What attracted you to your career in the insurance industry?

WK: If I have to be extremely honest, I literally stumbled into the insurance industry.

During my second year of MBA studies, I needed to get access to a multinational to gain corporate exposure and ensure implementation of the ideologies and strategic thesis I have been studying. An opportunity presented itself to become part of one of the biggest life insurance companies in Namibia. My journey started within the pension fund and investment space and through that exposure I gained my knowledge in life insurance.

B7: How did the Covid-19 pandemic impact the insurance industry in Namibia?

WK: The insurance industry is no different from any other sector in an economy. Insurers and bankers alike rely on a robust economy for sustainable operations, so this has had a great impact on our business, our customers and overall stakeholders and communities that we rely on to run a sustainable business.

However, the insurance industry is generally well prepared for major loss events, including pandemics. Having said that, the financial impacts will take time to play out and will impact each insurer and re-insurer in different ways - depending on the classes and mix of business they underwrite, their pricing and reserving methodologies, policy terms of trade and re-insurance coverage.

The speed at which Covid-19 is impacting the economy is unprecedented. Like many businesses, insurance companies are facing unique challenges in this rapidly evolving situation. How insurers approach and respond to these challenges will influence their resiliency and ultimately, how they will fare.

Falling equity markets and lower interest rates could result in balance sheet pressure for the industry as a whole. Insurance companies rely on their investment portfolios to generate returns. Markets have been in turmoil and, as a result, insurers' investment portfolios are reacting unfavourably. Additionally, interest income revenue streams may quickly dry up as interest rates continue to drop.

B7: Overall, what does the 'new normal' look like in the insurance industry?

WK: I’m extremely excited about the ‘new ways of work’. I anticipate that it will allow us to obtain new skills that will add efficiencies in the way we do business, as well as how we look and engage with developmental areas within our businesses.

The new normal in insurance is centred around technology and has been invaluable in helping insurers create better products and an enhanced customer experience, mainly with customer on-boarding and claims process.

However, the biggest impact was seen within the way we engage with our customers. The experience has opened up new considerations, or ways, to service clients on a more personal or individual manner, and the pandemic has actually brought the client/member even closer to the customer-centric focus of Liberty Life Namibia.

B7: In particular, how is Liberty Life Namibia embracing the post-pandemic landscape?

WK: From a financial perspective, we set aside additional reserving for claims experienced as a result of the pandemic. Across our group this was equal to approximately N$3 billion. Even though insurers do plan for these unforeseen events, as a group we felt that we needed to strengthen our reserving.

For customers, we have flexibility in our products so customers could reduce cover in accordance with their affordability. In the data of the Namibia Financial Institutions Supervisory Authority (Namfisa), you can notice an uptick in the lapses of insurance policies as a result of affordability. We noticed that lapses actually reduced initially, picked up later during 2020 and then reduced again towards the end of the 2020 financial year.

The other important element is to pay valid claims as they become due. That’s why customers take out insurance and we are in the business of hounoring those claims.

B7: What are the biggest challenges facing the industry and how is Liberty Life Namibia tackling them?

WK: The new year will be filled with opportunities to grow your business, but there will be challenges to look out for when navigating your way through the insurance industry in 2021.

As Liberty, we have adopted an "agile" way of delivering our work and services to customers. As part of these agile ways of work we have prepared for many of the potential threats to our business.

These challenges are:

1) Shifting balance of power,

2) Utilising data correctly,

3) Remaining on the cusp of new technology,

4) Understanding cyber risks,

5) Dealing with an on-demand economy,

6) More catastrophic events,

7) Global standards for insurance, and

8) Staying ahead of challenges.

B7: What is your advice to consumers and business facing hardship as a result of the pandemic? How important is insurance when consumers and businesses face tough spending choices?

WK: We have recently initiated a campaign called the “Value of Insurance” and the feedback we have received was that customers have felt the support of having maintained their insurance cover during this pandemic.

Insurance is seen as a grudge purchase in most instances, because we cannot foresee when we would require our cover and when these unplanned events will occur. However, in the face of the pandemic, while yes, we have seen the value in covering mortality and morbidity to a lesser extent, the cover that customers have had in the event of retrenchment has been invaluable. As an organisation we have definitely added value to our customers through our cover for economic events, rather than mortality events.

B7: What is your message to clients and Namibians in general?

WK: Please do not be demotivated, we are dynamic and agile people and challenges can only drive growth and resilience. As a people, let us be kind to ourselves and one another.

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