Sandbox: Where insurers test new ideas

A major driver of change is the socially and environmentally conscious consumer whose buying choices are increasingly influenced by a wide range of environmental, social and governance concerns that include, but are not limited to: animal testing; use of harmful chemicals in food production; and exploitative forms of labour. Such customers are moving away from brands that are not taking action on sustainability and are willing to pay a premium for brands associated with leading sustainability practices. Perhaps the most well known example in this regard is organic food. A similar trend is observed with key talent whose criteria for choosing an employer goes beyond the traditional pay and title to include the value system and corporate reputation of the prospective employer.

With so much technology can do, the insurance sector is encouraging innovative entrepreneurs to develop innovations that will increase the uptake of services and products within the sector.   

This follows the Covid-19 disruption that helped many entrepreneurs and the globe to appreciate technology as it (technology) reduces the time taken to move from place to place to make inquiries. It also helps unearth some of the myths surrounding insurance and looked at as an option rather than a priority.

To scale up the digitisation of services which are being held back by the absence or prohibitive laws; sector stakeholders are urging government to speed up legislation toward opening up space for more innovation and forming partnerships to encourage innovations.

A number of actors believe that introducing technology will ensure economic development, improve livelihoods and encourage empowerment and development through data driven decision making mechanism as opposed to working in the same traditional ways of word of mouth to promote growth and penetration within different sectors.

Sandbox

The Insurance Regulatory Authority (IRA) in collaboration with Innovation Village have introduced sandbox to that effect. 

A sandbox is a techspace where new innovations are tested before being approved. It also looks at matters on how to encourage new innovations in the insurance space and how the insurance regulator is promoting innovations.

Mr Arthur Mukembo, lead, Future Lab Studio says that the sandbox is a tool regulators find innovations to have a safe space, taken into the public domain for test purposes.

“The idea is after doing those tests you come back and sit on the table with the regulator to get their perspectives before being granted permits, to also create safe environments to interact with these innovations.  Sandboxes are very important for fostering innovations in highly regulated spaces for instance in insurance and banks and other sectors which involve consumer protection,” Mr Mukembo says. 

Passing the test

Mr Mukembo says this means that once you are ready and the regulator is satisfied, “We can test the outcome in the market  and see where the adjustments(of what has worked or not) of the innovation can come in handy; hence making the sandbox opportunity unique enough to solve large problems.”

 Mr Mukembo adds: “We are encouraged by IRA’s initiative in this perspective seeing that Uganda is still grappling with low insurance penetration which is a probably a similar problem in Africa.  From their perspective, lead through tech. We are delighted that they are working with us to see the work that happens before.”

This will enable Innovation Village work with IRA and insurers and players within the insurance space who are curious to work on how they can manage technology to ensure further growth within the insurance sector.

Speaking at the sidelines of the 54th CEOs breakfast meeting in Kampala,  Mr Ibrahim Kaddunabbi, chief executive officer at the Insurance regulatory Authority,  said technology for last mile penetration is the road map for the IRA through sandbox.  

“A team from the Innovation Village which has taken through CEOs from the insurance industry on how the insurance sector players can leverage technology and actualise innovation,” Mr Kaddunabbi said.

This follows IRA’s new rules and sandbox regulations to facilitate testing of new ideas and innovations in the insurance sector through a Regulatory Sandbox.

“So far, we have three products. But we want to see more coming up because they are going to solve problems of the industry,” he explained.

Building innovators

Mr Japheth Kawanguzi, founder, Innovation Village, says that Sandbox will build the business of innovators to scale up their businesses.

“The partnership will pull together innovators and different players within the insurance industry. If you look at insurance penetration at just 1%, everyone needs it (insurance) whether in the formal or informal sector,” Mr Kawanguzi says.

He notes that previously innovators had challenges such as working independently, something he attributes to the low penetration of the insurance sector.