Why insurance distribution is changing

Insurance distribution is changing as technology makes it possible to sell, underwrite and service insurance in ways that were previously difficult to do at scale.

Automated advice is not new under South African financial-services regulation, but its importance is increasing as digital distribution, algorithmic decision-making and AI become more embedded in financial services. Insurers such as Naked and Pineapple have shown what this can look like in practice, with customers able to quote, buy and manage insurance through largely digital journeys.

The change is not simply about putting traditional insurance processes online. Technology can remove handovers, reduce administration, improve decision-making and make it possible to serve customers at a much lower cost. Insurance can also increasingly be embedded into other customer journeys, rather than requiring customers to seek out insurance separately.

This shift is likely to be most visible in retail insurance, where products are generally more standardised and transaction volumes are high. Commercial insurance will continue to rely more heavily on specialist underwriting and broker expertise, particularly for complex risks, although many of the surrounding processes can still be digitised.

Ultimately, the opportunity is not to replace people with technology. It is to use technology to remove friction and reserve human expertise for where it adds the most value.