Case Study - Reaching Customers In More Ways Than One

Value-added services can assist insurers in increasing profitability, owning the customer interface, and reinventing product offerings. To reap these benefits, licensed FSPs selling value-added short-term insurance products, however, must have a clear view and understanding of their firm’s data in order to navigate a world of new and complicated risks effectively.

With load shedding, load reduction, and electrical surges all back on the table – and with more South Africans working from home as a result of the coronavirus pandemic – household appliances are especially vulnerable to damage. In fact, they account for a sizable portion of the short-term insurance industry's loss ratios.

What if a software system could aid both the insurer and the policyholder in minimising collateral damage through accurate "risk pricing" and eventually ensuring fair premiums?

Cardinal Insurance Management Systems

Often, short-term insurance businesses are unaware of the benefits of custom software until they begin using it on a daily basis and witness first-hand the productivity gains. Cardinal empowers insurers, underwriting managers, managing agents, and broker houses to flourish in a growing insurance market.

C360 is the company's flagship product — a unique software system built from the ground up with insurance organisations in mind. Cardinal’s C360BI (Business Intelligence) is specifically built for integration with Cardinal’s core C360, C360i and any other third party PAS. This add-on creates an ‘ecosystem’ of solutions that cater to each client’s individual and unique needs, and enables significant productivity increases as employees can automate time-consuming operations.

In brief: A digital-technology-driven operating model that would enable a company to interface with the market via digital platforms, conduct real-time policy engagement, claim management, and incentive redemption, as well as engage in risk-sharing models with their policyholder communities.

Risk Solutions International (RSI)

Historically, short-term insurance company models flourished on the economic assumption that non-claiming policyholders' premiums sufficiently supported payouts to a smaller number of policyholders. In the past, short-term insurers developed their risk calculation models using data obtained at the time of policyholder enrollment or throughout the claims process. However, digital technologies are rapidly altering the landscape of risk assessment.

RSI is a company focused on providing value-added products and services to brokers and financial institutions and is dedicated to assisting its corporate clients in retaining customers, growing earnings, and securing new business. As such, the company was looking for creative, agile, and lean software development tools capable of integrating and facilitating all of the company's requirements on a single platform. The objective was to transition away from the traditional and heavyweight software development processes used to deploy RSI’s value-added insurance offerings and toward new and evolving approaches that would work with an existing application. After assessing the advantages and disadvantages of alternative tools, it is unsurprising that RSI turned to Cardinal for help.

Why Cardinal C360BI?

One of RSI's most recent service solution – Smarthome (coverage for unforeseen failures of household fixtures and appliances), which launched concurrently with the coronavirus pandemic – necessitated a more simplified system for product sourcing, services, and claims and administration.

The goods and services offered by Smarthome Fixtures and Appliances are intended to aid clients in the case of a failure, which could be mechanical, electrical, or due to normal wear and use. Naturally, load shedding and the nationwide distribution of blackouts have a devastating effect on household items, causing large amounts of damage. This was a consideration RSI had to make. They needed to use technology to assist in determining the cause of damaged items in order to minimise losses.

The Benefits of C360BI

After several discussions with Cardinal and a demonstration on how C360BI works, the add-on was rolled out at RSI.

Glen Mollink, Managing Director of RSI, says he was immediately struck by how fast, and easily the system could input correct data for business analysis. Within a week, the RSI team gained complete access to business intelligence data regarding RSI's services. RSI determined that televisions were the appliances most likely to sustain irreparable damage as a result of load shedding, while bigger appliances, such as refrigerators and dishwashers, were most susceptible to damage from power surges, allowing insurance for these products to be priced appropriately.

A Competitive Advantage

C360BI has enabled RSI to remain at the cusp of significant value-added service advancements as a consequence of a better grasp of the company's risk and capital analytics and KPIs. RSI states that since implementing a custom software solution, the company has saved hours each day, ensured customer and employee satisfaction, and shifted its attention away from day-to-day operations and toward growth.

"When it comes to value-added insurance products, one of the most significant issues that value-added insurance firms have is accurately pricing replacement items. We now have a proper data model to work with, thanks to Cardinal’s C360BI. The ability to visualise a breakdown of data in seconds – and with granularity capabilities – is really significant to us," adds Mollink.
"There is significant benefit in knowing which appliances are more likely to break, when they are more likely to break, and how frequently they are likely to break, and pricing these goods appropriately. We have a better understanding of the factors that influence risk and capital in our business."

Where To Next?

Numerous factors indicate that the next decade will be fruitful for value-added insurance companies. Demand from customers is at an all-time high. Indeed, the COVID-19 pandemic, along with the South African energy crisis, has re-emphasised the importance of household protection.

Using its skills as a foundation, RSI stays committed to developing combination and customised goods and service solutions that meet the needs of its clients. The company is always pushing the envelope in terms of openness and service quality.

Meanwhile, C360 continues to serve and complement the most forward-thinking InsurTech demands and initiatives. Because, whether we like it or not, technology has an effect on nearly every part of our life. And for insurance businesses that want to be competitive but rely on the same off-the-shelf or subscription-based software as their competitors, it's even more difficult to differentiate themselves. With Cardinal, you can ensure that your business does not fall behind due to outdated technology.

“With the current insurance landscape, short term insurers need better risk selection and pricing. They need to ensure fewer claims are rejected based on incorrect data, that less time is spent on handling claims, and that expenses are reduced through faster onboarding processes,” says Graham Harvey, Group Chief Executive Officer, Cardinal.
“RSI have been a client of Cardinal’s for about a year. Prior to working with us, the company had tried to make changes to their existing infrastructure and limit rising costs, but were unsuccessful. Since working with us, RSI have been able to streamline their systems to enable the company to transform their businesses and successfully reduce their loss ratios.”

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