Direct life insurance: More South African insurers entering the market

Published on 16 November 2010

by Staff Reporter

Rising living costs and the impact of the recession has helped to make the direct life insurance value proposition highly attractive to South African consumers.

The direct-to-public insurance model has been in use in the short term insurance market for a while, and has recently also been adopted by a number of emerging direct life insurance companies and life cover brands launched by existing short term insurers.

Why choose direct life insurance?

Being a traditional grudge buy, life insurance is a particularly price driven product. Conventional life insurance companies have tended to be quite bureaucratic structures, adding costs with every administrative step in the policy origination and management process.

Over time, this has created a market opportunity for emerging insurers such as Instant Life to target the lower end of the market with a range of simple to understand, exceptionally affordable life cover products.

Launched in 2008, Instant Life Insurance iis South Africa's first and leading fully online life insurance company. By employing a robust online life policy management platform that puts consumers in the driving seat to manage their own policies, Instant Life Insurance has removed both brokers and call centres from their list of overheads, enabling them to reduce life insurance premiums by up to 50% or more.

Everything happens online – from life insurance quotes being requested to signing up and claiming – the process is fast, and cover can be activated immediately. There are no inconvenient medical tests required up-front, with the discrete online sign-up process making the product even more attractive. In addition, policyholders are rewarded for not claiming, with up to 20% in premium cash backs for every 10 claims free years.

Short-term insurance company OUTsurance soon followed suit, launching a fully underwritten and comprehensive direct life insurance product in 2010.

During November 2010 newcomers Frank.net also joined the fray, positioning themselves as the straight-talking life investment company.

Direct life insurance market in SA set to grow even further

According to the most recent Internet statistics published by internetwordlstats.com, only 10.8% of South Africans are using the Internet, meaning that the bulk of the population are not yet shopping online. As broadband adoption becomes more widespread, however, demand for online services such as direct life insurance look set to escalate significantly in years to come.

 

Read more South African life insurance articles here.