Growing the long-term insurance industry in times of economic downturn

By: Schalk Malan – CEO, BrightRock

The insurance landscape is one of ever-changing complexity. The regulatory environment is shifting, consumer expectations are changing, while fast-developing technologies require business models to become more refined to enable innovation, improve risk management and deliver greater value to clients.

These rapid changes, accelerated by socioeconomic factors, have led to a difficult operating environment for the sector, creating both challenges and opportunities. Despite these conditions, the sector has weathered the storm and performed well for clients, remaining stable amid massive volatility. However, the key question is, will the South African insurance market maintain this stability and even achieve further growth in a depressed economy?

A lot will depend on the insurers themselves, their ability to adopt agile approaches, and their continued readiness for further unexpected occurrences like those encountered in the past 24 months – such as the COVID-19 pandemic, the July 2021 looting, or the recent KwaZulu-Natal floods. From launching as a zero-base start-up on 30 May 2011 to a handful of founding employees and investors, BrightRock has grown rapidly into a market even in a declining economy. Here are some of the lessons that we have learnt over the past decade.

Lesson 1: Finding purpose in a period of volatility 

BrightRock was founded in the wake of the 2008 sub-prime lending crisis, and an ensuing recession, that had impacted many lives and futures. BrightRock saw an inherent gap and opportunity in the financial services sector in general and the insurance sector in particular. Despite a period of global systematic change, the company developed needs-matched money products that would enable individuals to be the architect of their own financial solution – and in so doing, achieve the company’s stated purpose: to help people better navigate change in their lives. Essentially, BrightRock gave consumers better value for money and more flexibility about the life insurance solutions could buy at different stages of their lives, thus moving away from one-size-fits-all risk insurance products. 

In addition to finding a purpose, insurance companies need to customise their offering because people have different needs.

Lesson 2: Customise your offering  

In an era where digital technology delivers bespoke, on-demand experiences, consumers expect seamless, customised solutions, services, and product offerings. While insurers and financial advisers are increasingly harnessing technology to enhance service experiences, there has been very little innovation in terms of the underlying product structures. For instance, BrightRock provides better value for its clients through using a back-to-basics approach to product design, which is consumer-centric and unique to the individual financial protection needs of each consumer. While most insurers offer clients around 52 different cover and premium combinations, BrightRock has harnessed technology to deliver around 54 000 possible combinations, so that clients and advisers can structure a truly personalised life insurance solution in keeping with our needs-matched product philosophy. This is presented to the client in a simple, user-friendly interface that centres on the client’s own financial needs, using language that the client is able to recognise and relate back to their day-to-day life. While we are starting to see new InsurTech players introducing new insurance platforms in the market, I believe the insurance sector still has a long way to go to fully harness the latest technological advancements to offer clients truly customised benefits and risk solutions.

Lesson 3: Leverage the diverse skillsets of your team to enable effective collaboration 

The insurance sector employs a diversity of skills, from actuarial and financial to digital and technical. The ability to harness these skills and allow cross-pollination across different disciplines is something that differentiates BrightRock from other competitors in the market, where more siloed structures prevail. With a variety of expertise and inputs, you can develop more effective strategies around your products, services, sales, and marketing because teams are collaborating from the get-go to create the best possible solutions. My recommendation to new market entrants is to look at how best to interweave different skillsets and actively encourage cross-functional collaboration from the very earliest stages of a project. It is an approach that saw us deliver results first-hand during the incubation of BrightRock’s needs-matched insurance offering. 

Lesson 4: Be prepared to go back to the drawing board a few times

In any venture, there will be obstacles that test your resilience and commitment. To address these challenges, you will need to keep rethinking and refining your business model. If you can evolve your plans and strategy while staying true to your purpose, your business will be able to remain relevant and sustainable and be positioned to seize the opportunities posed by unexpected circumstances. 

There has never been a better time for product innovation than now. The biggest opportunity in the financial services industry lies in delivering value to clients during difficult times. The COVID-19 pandemic demonstrated the importance of life insurance products, which delivered certainty for clients during this time of upheaval. As economic forces continue to transform, there will be an increase in demand for products that are more affordable and that offer more value for money – creating the perfect opportunity for new thinking. I also believe these circumstances position BrightRock ideally in the current market. An inherent characteristic of BrightRock’s needs-matched product architecture is the efficient way cover is structured. Clients can get around 40% more cover for the same premium. The product offering is designed to adapt to changes in consumers’ financial needs over time, ensuring that when people’s financial responsibilities are at their highest, their cover is as well. And as their needs reduce, the cover reduces. This delivers significant premium savings, and sustainable, cost-efficient financial protection, which I believe will be more in demand than ever. 

Lesson 5: Strive to advance and evolve your offerings

Insurers will need to continuously look for ways to provide even more certainty to clients, especially when their needs change. This requires a willingness to grow, innovate and learn. In BrightRock’s case, this has meant a commitment to being responsive and to taking feedback from clients and their financial advisers, from business partners and from investors which has helped to guide us in terms of our strategies. BrightRock’s philosophy is to #LoveChange and I believe what will determine our future success, as we move from disrupter to established incumbent, is our ability to stay true to that commitment, which requires us to continually keep growing, innovating, and learning from these stakeholders.