Ant Miller, CEO of Simply Financial Services
2021 has delivered mixed fortunes for Simply and other players in the life insurance space. On the one hand, demand for cover has soared with searches for ‘life insurance’ reaching unprecedented levels globally and life insurance being seen as a necessity rather than a grudge purchase. On the other, payment rates have deteriorated and claims have increased dramatically.
At Simply, we’ve benefited overall from strong sales growth – driven primarily by brokers on our online platform. The Covid pandemic brought forward the industry’s digital adoption trajectory by at least three years, and we were fortunate to be in the right place at the right time with a compliant digital solution. It hasn’t all been plain sailing, though. With SMMEs being particularly badly affected by the pandemic, our unique SMME group life product took a significant hit and is only now getting back to pre-Covid levels.
Outlook for 2022
At Simply we’re feeling optimistic for 2022. We’re at the intersection of three strong forces – improving business confidence, sustained high demand for life insurance and a swing to digital financial services products. We’re also fairly confident we’re through the worst as far as Covid claims is concerned.
Having said that, I think traditional players face significant challenges in 2022. Many have not modernised meaningfully and run the risk of being left behind by their more agile competitors. Fast moving new entrants are going to chip away at margin and market share, but the big risk lies with the banks and telco’s who have distribution, existing relationships and loads of data on their customers.
Guidance to industry players on how to make the most of the current environment
Covid has ramped up demand for and appreciation of life cover materially. Life insurers have largely conducted themselves well through the pandemic and enormous amounts of money have been paid out. I think players should use the goodwill to expand penetration of life, disability and critical illness cover, which remains low relative to funeral cover. I also believe players should consider entering adjacent markets – banking, telco – for strategic reasons while customer affinity is strong.
I also think players need to really pay attention to collections. The SA economy appears to be heading in the right direction but is definitely not out yet of the woods. Consumers and businesses – especially SMMEs – remain very stressed and collections are likely to be a challenge for the foreseeable future. Collection is a function of willingness to pay rather than the ability to pay, so players need to show visible value to get customers to want to pay.
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Opportunities and challenges for the various stakeholders
I’ve covered many of the challenges and opportunities faced by market players in my comments above. What I haven’t covered is what regulators can do to improve customer outcomes.
For me, an obvious opportunity for regulators is a review of group commission regulations. Group cover is generally way cheaper than retail cover and there’s a strong logic for employers to arrange or buy cover for their staff. The challenge is that commission is regulated at such low levels that it just doesn’t make sense for brokers to sell group life cover to SMMEs, which account for over 60% of formal employment in the country. If regulators increased commission rates on smaller schemes, they’d close the insurance gap materially in a short period of time.
How you and your business aim to add value to stakeholders in 2022
We have a number of key stakeholders, the most important of which are our end customers and our supporting brokers. Our aim for 2022 is to fundamentally improve their lives.
Our primary objective for end customers is that they get the benefits they need at a price that makes sense in one simple policy. We have a number of product, user experience, pricing and collections improvements in the pipeline – all aimed at improving customer value.
On the supporting broker front, our objective is to give our brokers great products for their customers and help them do more sales in less time. Key to this is ongoing improvements in benefits, 3rd party data use, risk management, compliance and collections.
We’re building a better mouse trap. Watch this space.