Insurance is a grudge purchase; no one particularly wants to spend money on something that might come in useful one day. Add to that the hassle of phoning up a call centre or broker to find the best value deal and the tediousness of filling in pages of forms, and you have an industry that is not well loved by the consumer. The public’s perception is often that it is a staid, boring market dominated by large companies trying to rip their customers off by extracting as high a price for as little cover as possible.
However, insurance is arguably becoming more and more important in this age of technology. With assets like smartphones, drones and wearable technology becoming more widespread, and issues such as cybercrime becoming more relevant, the need for insurance is on the rise. The advent of innovative, technology-driven, consumer-focused start-ups is changing the face of the industry, and importantly, the public’s perception of its place in society, at a rapid rate.
The South African insurance market is well developed and highly competitive, with a 17% penetration rate in 2017, according to Statista. But consumers are spoilt for choice with so many products on offer which means it can be a confusing place to navigate. The industry is undergoing a meaningful transformation, with three main factors propelling the change.
The first is the problem of high cost. In a highly fragmented market that is dominated by physical intermediaries, the consumer bears a substantial financial burden given that the operating costs incurred by these intermediaries are often passed on to the end-user.
Regulatory barriers to entry
Second are the cumbersome regulatory barriers. The South African insurance industry is one of the most regulated markets in the world and one of the biggest hurdles distributors face is the requirement to i) be licensed to broker insurance and ii) have registered individuals available to explain financial products to customers. This essentially means that any firm that isn’t a broker or doesn’t have a call centre staffed by qualified personnel, is unable to enter the fray.
Shifts in consumer behaviour
But perhaps the most important factor is the changing behaviour of the consumer. People are no longer happy to be sold a product with arduous form-filling and lengthy back-office procedures. Gone are the days when consumers had the patience to wade through layers of administrative tick boxes and manual processes. In this age of instant gratification, consumers want convenient insurance on demand that is transparent, easy to understand, simple to sign up to and straightforward to claim from. The industry is being forced to shift gears from what was previously a “push” model (i.e. call centres and brokers pushed products onto consumers) into a “pull” model whereby the consumer leads the process. In short, consumers no longer want to be sold insurance, they want to buy it.
Click2Sure’s digital offering
Click2Sure is our endeavour to disrupt the South African insurance market and improve the industry experience. We enable the purchase of both short- and long-term insurance and protection plans at the point of sale for a range of products, including new technology (such as drone and wearable technology). We also offer consumers the ability to easily claim against their insurance policies via an online policy management and administration platform, with effortless access to all relevant record. From the reinsurer’s perspective, we can provide detailed reporting on premium or loss data. Offering the full range of insurance-related services is what sets us apart from competitors who generally only provide one component of insurance (the distribution, the administration or the reporting). Click2Sure is designed to ease the friction related to both the distribution of insurance and the facilitation of claims by the consumer.
The transition to automation awaits
Importantly, our offering addresses the changing behaviour of the consumer at a more competitive price because we have replaced the physical intermediary with digital integration. However, because people are used to buying their insurance through a broker, or being able to call a human being to walk them through the process, the concept of near-instant insurance with no human interaction can be somewhat daunting at first. That said, the transition to a simpler, more automated business model is definitely underway and we are confident that it will only be a matter of time before it becomes a trusted and entrenched way of buying insurance.
 Statista website: Rate of insurance penetration in Sub-Saharan Africa in 2017, by country, 2018