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Change in the market keeps the industry on its toes, finds the 2013 KPMG Insurance Industry survey. While the survey boasts strong profit performance in the long-term insurance segment, overall the findings paint a grim outlook for the industry – with increased competitiveness, subdued economic growth and a mix of legislative and regulatory changes, including the implementation of Treating Customers Fairly (TCF).
According to Laurence Hillman, MD of 1Life, “The market uncertainty we face now - around economic growth, the tax basis or the cost of compliance with the latest legislative and regulatory changes – is not unlike any of the challenging times that the industry has overcome before. As a medium-sized player in the long-term insurance market we experienced strong, sustainable growth in 2012 and though consumers may experience a strain on their disposable income in the current economic climate, we’re still optimistic of sustained growth for this financial year.”
In 2012 consumer confidence picked up and two key trends emerged; firstly, changes in consumer class fractions – with a growing middle class and greater awareness of financial products in the low-income mass market – that increased demand for financial products. The second noticeable trend was vast increases in the number of consumers going direct.
Hillman adds, “I have always been of the view that there is place in the market for both the direct and intermediated business models – direct insurers make accessing financial services products simple, convenient and affordable for the majority of South Africans, whereas intermediated channels provide a service to high net worth individuals with complex financial issues. These emerging trends amongst consumers however highlighted opportunities in the market to provide direct financial services and this enabled us to expand our product offering.”
Since 1Life launched in 2006 as South Africa’s first fully direct life insurance provider, the company’s aim has been to expand the portfolio and include products tailored to meet a customer’s needs at any life stage. Part of this strategy was to have one recognisable name and brand that all of our products could fall under - 1Life, 1Lifedirect remains the company’s insurance product line, and this has been expanded to include, 1Lifefuneral, 1LifeInvest, 1Life Personal Loans and free standing Disability and Dread Disease cover products. “I believe this strategy has not only been to the benefit of our clients, but has enabled us to proactively respond to ongoing changes in the industry,” continues Hillman.
Staying abreast of discussions and changes in the legislative and regulatory environment remain a priority for the insurance industry according to KPMG’s latest survey. Compliance with the imminent implementation of Treating Customers Fairly (TCF), for instance, has been cause for concern for many players in the industry – in adapting how they do business and contract their policies as well as the cost of compliance with this legislation. The aim of TCF in the insurance industry is to ensure that all financial services companies place the customer at the centre of their business. Hillman says, “In our environment, we have structured our product offerings and our financial solutions in a way that ensures we are selling the right product, to the right customer and it is appropriate for their needs and specific life stage. We are committed to embedding the underlying principles of this new legislation into our business, to this end all our staff are dedicated to Treating Customers Fairly with our “service way” and are monitored and measured to ensure that these values are lived throughout the organisation”
“While we have always been customer centric, our transformation from being a ‘pure and simple’ life insurer to ‘changing lives’ as a financial services provider was based on remodelling our business around our customers and aligning our brand to the financial solutions we now offer,” concludes Hillman.