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The insurance industry in Mauritius is highly competitive and insurance companies are very customer centric, says Vasish Ramkhalawon, Secretary General at the Insurers’ Association of Mauritius. He explains how insurance companies in Mauritius are adapting in the face of new technologies and the changing demands of consumers in the light of COVID-19, and highlights that Mauritius is already the hub for reinsurance business for Southern Africa with some top reinsurers established on the island.
How would you describe the insurance landscape in Mauritius today, and the role of the Insurers’ Association in this context?
Mauritius has a well-developed insurance industry regulated and supervised by the Financial Services Commission (FSC) under the Insurance Act 2005.
The insurance regulatory framework is aligned with the International Association of Insurance Supervisors (IAIS) standards and principles and has many strong elements focusing on specific regulatory issues relating to capital adequacy, solvency, corporate governance, early warning systems and the protection of policyholders.
Insurance companies in Mauritius offer various services and also products which are categorised under long-term business insurance and general insurance.
With a contribution to GDP of 2.8%, the insurance sector is important for the stability of the financial system. Insurance companies are not only large investors which carry most of the investable assets in the country but they also safeguard the financial stability of households and firms by insuring their risks.
The insurance industry is progressive and, over the last 20 years, the industry has witnessed major transformations of its business model.
The Insurers’ Association of Mauritius is a trusted and knowledgeable voice for sustainable growth of the insurance industry to support the economic and social development of Mauritius.
As a committed association, our main role is to collectively enhance consumer understanding, business and professional skills, promote industry best practices to build and sustain a reputation of excellence for insurers.
What will be the main priorities for the Insurers’ Association for this year?
Over the last 2 years, against the backdrop of ongoing uncertainty, there are 3 key areas where important regulatory changes are emerging or accelerating and on which the association will continue to focus its attention:
- Digital transformation and data.
- Risk Management - AML/CFT and compliance.
- Consumer protection and financial literacy.
In addition to the above, the association will continue to devote considerable time and effort aimed at improving many aspects of motor insurance and road safety.
The implementation by the FSC of a National Claims Database system to facilitate motor insurance claims and recoveries is a key reform and will also ensure the efficiency and effectiveness of other proposed reforms in this sector. We are galvanising our efforts to accelerate this initiative.
With the insurance industry in Mauritius being highly competitive, as it features as many as 15 general insurance companies, could you tell us how players here on the island are adapting in the face of digital transformation – noting the rise of InsurTech, messaging platforms and online sales channels - to help differentiate themselves in the new normal?
New technologies are offering new ways for insurance companies to manage their customers’ needs.
However, a common misunderstanding of digital transformation is the focus on technology and on how it will have an impact on the future.
Digital transformation is much more than just technology. It is also about customer centricity, understanding customers and providing customised products and experiences that keep them engaged.
Technology like InsurTech will support this approach, but there also has to be a change in mindset.
Insurance companies in Mauritius do understand this new imperative and are positioning themselves as partners to their customers.
Like you rightly said, the insurance industry in Mauritius is highly competitive and insurance companies are very customer centric. They are all implementing technologies not because these are available but in order to meet customer needs and add value to the customer experience.
The insurance business has always been a people business where agents and brokers are used as intermediaries. However, insurers are becoming aware that they need to know their customers more holistically to be able to meet their expectations. They are all investing heavily in digitalisation that will help them gather the relevant data and stay in direct contact with customers.
Physical and digital channels are being completely integrated to give customers omnichannel 24/7 access. Insurers are taking advantage of InsurTechs and customer data to offer unique customer experiences and individualized products.
In particular, against a COVID-19 backdrop, could you tell us what are the changes that have taken place in the increasingly crucial space of health insurance?
The COVID-19 pandemic has changed not only individuals’ approaches towards health insurance but also various health insurance policies.
The severity of the COVID-19 pandemic and more so post-COVID complications have made people realise the importance of having a health insurance cover.
The pandemic has forced people to shed their reluctance to buy health insurance policies.
While people are inquiring more about health policies, about benefits and exclusions alike, insurance companies have also improved their offerings by adding more features and relaxing some rules.
How are insurance players using new pioneering initiatives in the area of car insurance to protect their customers?
The role of insurance companies in the area of car insurance is evolving from a purely risk protection approach to one which includes risk prediction and prevention.
With connected technologies and the IoT devices (e.g. mobile phone with sensors), insurers now have the ability to tap into discrete data on a real-time basis.
Therefore, some insurers in Mauritius have started to use data to gauge the risk profiles of their insured.
With robust data analytics systems, some insurers are analysing and offering new experiences including new rates based on the updated risk profile.
How does the insurance sector deal with natural calamities in Mauritius, such as cyclones?
All general insurance companies in Mauritius do provide full insurance cover to both individuals and businesses for damages caused by cyclones, hurricanes, storms and tempests and also flooding and inundation to properties including vehicles, buildings, outbuildings, contents and equipment etc.
They not only have well defined policies in place but are also very responsive to clients in the event of a claim.
Moreover insurance companies will issue through their websites, social media and direct mailing to their clients preparedness and precautions to be taken in the event of a cyclone; before, during for different classes and after.
Moving from Mauritius to the wider continent, in view of the African Continental Free Trade Area (AfCFTA) as well as the already entrenched place that Mauritius holds in the financial services space in Africa – with players such as Africa Speciality Risks already leveraging this value-add reputation to open offices in Mauritius – what would you say is the potential of the island economy to act as a regional reinsurance hub?
Competition among reinsurers is increasingly fierce. Reinsurance companies are looking forward to developing their presence in jurisdictions which are most favourable to the development of their portfolios and to the proper management of their structures.
The potential of African markets allows some countries to be among the favourite destinations for reinsurance companies.
Presently Mauritius, Kenya, Ivory Coast and Morocco are aspiring to become one of the regional reinsurance centres.
Mauritius is already the hub of reinsurance business for Southern Africa with some top reinsurers already established.
Hopefully, with the AfCFTA, Mauritius will become an even more attractive jurisdiction for many reinsurers who intend to reinforce their presence on the continent.
Looking to the future, how do you see the potential of on-demand insurance in the island economy? What trends are you noting currently?
On-demand insurance is a digital insurance model allowing potential customers to turn on and off their insurance – and only pay for the time when the need for protection arises. The process, done with a smartphone app, is fast, easy and the service is subscription-based, and with clear pricing.
Therefore, on-demand insurance, in comparison to traditional insurance, has larger transactional volume and requires new capabilities, including:
- Customer-first product design.
- Multi-channel data collection capability.
- Robust data analytic system.
- Continuous underwriting capability.
On-demand insurance works as a “pay-as-you-go” coverage and charges no more than the actual usage. For it to work there are important business conditions namely:
- High insurance penetration.
- A large client base.
- Higher capital reserves.
- Novel tracking systems to avoid increasing fraudulent claims.
As I have mentioned before, the insurance companies in Mauritius are very consumer centric and are adopting technologies in line with customer needs.
On-demand insurance is not expected to become the default offering for many insurance types in the near future in Mauritius.
It may be relevant for some tech-savvy customers, and as the needs would gain more and more traction, insurance companies would proactively respond to them.