Doing a Capitec: Life insurers get smart about low-earners

New players in the financial services sector seem to understand the low-income market better than their more established peers. Perhaps it’s because some started their operations when it became apparent the emerging black middle class and low-income households offered new growth opportunities for financial services companies.
Capitec for instance was one such disruptor when it came onto the scene in 2001. Now, depending on whose figures you are looking at, it is ranked as the biggest or second biggest bank in SA.
Funeral insurance companies aren’t folding their arms either and are tailoring products specifically for the low-income market. Hollard is one player that has revised its strategy so it can operate across the financial services value chain. The insurer has piloted a bundled life and funeral cover product that is proving popular with clients. Using funeral cover as the selling point to its client base is a smart move by Hollard.
As the group’s CEO, Sacks Ntombela, said last week, the group recognises funeral cover is more valued by this market than life insurance. Bundled products can be complex and pricey so Hollard must be given credit for not simply pushing expensive non-underwritten insurance. Instead the company is giving its customers an option to choose underwritten policies to reduce premiums.
The company has also just piloted a savings and transactional card with a digital focus. It remains to be seen how that product will be received given that the market Hollard serves, predominantly transact in cash.