Digital Transformation in South Africa's Short-Term Insurance Sector: Traditional Insurers' Responses to the Internet of Things (IoT) and Insurtech

Abstract

This article explores the impact of the internet of things (IoT) and insurtech on South Africa's short-term insurance industry. The research found, based on interviews with high-level players in or connected to the South African industry, that while IoT and insurtech are significant potential drivers, the country's incumbent insurers have to date been slow to adopt these digital transformation elements in their business models. This article outlines the drivers of IoT and insurtech, the factors influencing the slow adoption of these elements by traditional South African insurers, and recommendations for the adoption of these elements by South African insurers.

Mindset shifts for the Fourth Industrial Revolution: Insights from the life insurance sector

“…This study demonstrates that the resistance to change that is clearly present at the institutional level of the broader insurance industry is also present at the organisational and individual levels (Singh et al, 2012). This aligns with Moodley's (2019) findings about resistance to change at the organisational level among the incumbent organisations in his study of InsurTech in South Africa. This study, however, provides greater granularity, qualifying this resistance in terms of the mindsets, norms, structures and culture embedded within life insurance organisations.…”

“…If anything, as the trajectory of FinTech would suggest, it should drive innovation (Arner et al, 2015). For instance, Moodley (2019) points to the potential of value-based InsurTech to meet the unique needs of these 'unready' markets in South Africa. The reactive approach to the 4IR supported by half of interviewees seems ill-advised in the light of the rapid speed of change and need for urgent responses described in the literature (Bose & Bastid, 2018).…”