Underwriting requires information, so what can your connections tell us? Greg Becker visits South Africa to look at one idea.
South Africa has consistently been at the forefront of product innovation, with many of their innovations reaching British shores. Great examples include critical illness and innovations such as Vitality.
This hotbed of ideas is partly in response to an environment where the insurance industry has evolved to meet the needs of the middle classes who rely on private medical provision and non-state-based safety nets.
Add to this a diversity of customers, with segments ranging from the globe-trotting ultra-high net worth to the financially illiterate living on the breadline, who often rely on micro-insurance products to cover funeral expenses.
If giving an award, selecting the finalists for a product and initiative shortlist would prove to be a challenge. The types of innovations and initiatives that would be in the running for the award include:
- Discovery's Vitality model, that has found its way to the UK with PruProtect
AltRisk's life insurance for those with HIV, with ongoing underwriting checking compliance with medical treatment - Frank.net and its "you die, we pay" approach (with bonus points for its very dry sense of humour), and
- The Zimele industry initiative, which has facilitated the development and sales of viable products to the poorest, financially illiterate parts of the market who have traditionally been undersold.
With all these strong contenders, it would still be reasonable to make the Platinum Life Female Cancer Care Policy - not on the list - the winner. A highlight of this product is the sales process. We all know that friends and family are trusted sources of advice. Platinum Life builds on this, and offers existing customers the ability to refer its product to others in a new take on the classic "member-get-member" marketing approach.
Goodie bags for clients
In the case of the Female Cancer Care Policy, a handbag with cosmetics is sent to the referrals - and this is the only way to access the product. This method instantly limits access and puts a brake on the anti-selection risk.
The handbag contains some product samples appealing to the target segment - things such as hand cream and soap. It comes with a little combination lock on it, and a CD with the instructions boldly emblazoned: "Listen to this CD and on one of the tracks, the code to unlock the bag will be revealed." The first track has testimonials from customers, with excerpts such as: "When I had breast cancer, Platinum Life came to the rescue and paid out when we needed it most. You guys are tops!"
