COVER’s Tony van Niekerk talks need matched life insurance with Schalk Malan, CEO of BrightRock.
Tony: We have seen quite a bit of activity in terms of claims over the last two years and as we start getting back to normal people are going to evaluate how they should be doing their financial planning. I think one of the important things, as BrightRock has said from the start is; what are the reasons for buying insurance? Many people must have thought deeply as to what exactly their need for insurance is.
Please give us your thoughts on that?
Schalk Malan: Firstly, some interesting stats that I think support this discussion. If you look at a recent survey by Remark, a study showing that people are looking and re-evaluating the value of insurance in the South African market, more than 56% of people are seeing more value in their life insurance.
That has given way to stats of up to 38% and even a higher percentage of people buying more cover, as a result of COVID. We have all felt the impact of COVID on our families and our lives and it has been devastating. This has unfortunately seen a lot of people faced with the circumstances of utilizing their life insurance policies. That just illuminates the purpose of life insurance. We exist to protect those families, to help them in times where they are not necessarily able to help themselves.
For BrightRock it has been an amazing journey. We have been in the market now for over 10 years and it has been something that we came to market with, and you illuded to, the need for life insurance has existed for many decades. Where BrightRock came into play was to say that, as a life insurer, we understand your needs, and those needs are typically wanting to protect your future income streams. We recognised the elements that really make up the need for life insurance. Before BrightRock, insurers looked at those needs in one bundle, and life insurance companies would traditionally put them all together and work out that you need X million rands of life cover. Let us say for argument’s sake, that it is R3 or R5 million loss cover, that 5 million will react the same irrespective of the underlying needs that it covers.
When we came to market, we decided to unpack and price them as per the need. We allow the client to adjust it over time. Buy more if needed and convert it if the need has expired but making sure that every single need is priced effectively and efficiently. The result has been unbelievable, because now a consumer buying the product can strip out waste and buy just what is needed.
They know that they have peace of mind that if their needs change, they can do that and they can generate savings in their premium of 30 to 40% or buy more cover for the same spend. When buying a BrightRock policy, clients can buy as much as 10 million rands worth of cover over time without the requirements of underwriting. They can move their premium if the debt needs have expired because, and re-channel that premium and buy, for example, more cover for your children’s needs. Being able to use technology, being able to present it in a manner that a client can understand and relate to, that really gave BrightRock the edge, which we have been building on for the last few years.
Tony: Have you seen any activity where people come in and ask for certain changes that are different from what you have seen before the COVID pandemic? Is there a bigger focus on the amendment of life insurance?
Schalk Malan: We are seeing that our clients are looking, as I mentioned earlier, to cover their needs in a bigger way than ever before. We as an industry have often spoken about the insurance gap being in the tens of billions of rands, specifically for death cover and permanent disability cover. We created that ability for the client and adviser to see what the need or gap is and how it changes, by how we present it to them. The product in a way, performs and helps aid the advisor in having that needs discussion. The product illuminates how far short they will fall when compared to their existing solution.
More bang for buck – We saw a lot of that. Having said all of that, on the other side, we have also seen that consumers are under financial pressure, economic pressure and it is a reality not just in South Africa but in the world. So, what we are seeing here is the ability of clients to flex their cover and go into areas where their money can be more effectively or efficiently applied.
So, all these things are starting to come through. The other element as well, which is fascinating, is just how the world of work is changing. People are demanding more flexibility in the cover as they might have various streams of income, they might move out of the formal employment space and into more of a consulting role.
So, there is a lot of engagement and change happening as our customers are seeing their future world developing. These are all things that we as life insurance companies must deal with and I think advisors in particular, are challenged by it.
More human – Then lastly, people are just expecting to be engaged within a world where they want to understand what they buy. As the millennials start becoming consumers of insurance products, we must realise that their need, in terms of understanding not just the product that they are going to buy but the requirement to be engaged with in a different manner, is also presenting a very different world to get used to, and to work with.
Tony: Our recent InsurTech conference had the theme “Tech when we need it and human when we want it,” because all of this is providing the advisor with an opportunity to prove themselves and their value and why they are there. How do you see these influencing financial advisors over the next couple of years and how do you see them taking advantage of that?
Schalk Malan: I cannot agree more on the importance of the role of the advisor. In a very noisy world, there’s so much white noise in the system, so many being misleading and being taken out of context. These days, when we have an ailment, we go onto Google and we Google what is wrong, and we learn 10 different diagnoses of what could possibly be the problem.
And it is very similar in life insurance or financial services, as a topic you should not self-diagnose, it is a very complicated situation. As I mentioned earlier, every single client is unique and different. For me, the trend is, and we at BrightRock believe it and we have been consistent in saying this, not just a return but a strengthening of the role of advice. The strengthening of the role of that human engagement, that peace of mind, and a lot of the FinTech’s and Insurtech’s have been built around trying to eliminate the role of the advisor, basically trying to get direct to client.
There is an amazing opportunity for advisors to build on that platform where clients realized the need for insurance over the last two years. There is now much more of a pull situation than a push where clients are open and willing to listen to an advisor. And then, from there, we have a conducive environment for bridging that insurance gap.
The final thing that I think we all must take another look at and think about, is that we must appreciate consumers are definitely more educated than ever before. They are not just going to take things on face value, and we cannot just accept that they will.