KPMG’s Insurance in Africa report cites an article by Imara, an investment banking group, that says most traditional insurers target only the wealthiest 5% of the adult population, with the poor having no insurance. In South Africa, this presents a significant opportunity to grow insurance penetration in underserved markets.
This needs to be done by providing access to low-cost, simple insurance products (known as micro-insurance) to lower income consumers, providing greater financial security within these communities.
There is no denying that the financial impact of an uninsured loss or event is particularly hard felt in lower income populations. These households and families are hardest hit by risks such as disability, disease, accidents, and death of a family member or breadwinner.
People without appropriate cover are more likely to find themselves in debt traps. They have less access to proper care, are less likely to recover from a crisis, and more likely to remain trapped in the cycle of poverty perpetuated by uninsured setbacks.
“This is where insurance telesales plays an invaluable role. With 59m registered mobile phones out of an approximate population of 52m, telemarketing’s role in the growth of the insurance sector in South Africa’s underserved markets should come as no surprise,” explains Rogan Davies, group CEO of O’Keeffe & Swartz.
“Telemarketing is effectively used by product providers with affinity databases, such as banks. They leverage the relationship of familiarity and trust to sell, upsell and cross-sell added value insurance products to existing clients.”
“Consumers are more receptive to a telesales pitch when it comes from a known and trusted service provider. In this space, we’re also seeing a growing demand for and take-up of healthcare, cancer and disability benefits. We expect this to continue as marginalised consumers recognise that their lifestyle risks extend beyond funeral cover alone,” he adds.
It's easy to be pessimistic about the future role of telemarketing. Some of that perception is justified when one considers the heady free-for-all days prior to the Consumer Protection Act (CPA) and the Protection of Personal Information Act (POPI). Unprofessional operators did a great deal of damage to the telemarketing industry by burning out databases and pitching products to wholly unsuitable markets. Now, regulation has played an important role in cleaning up the industry and levelling the playing fields.
For many consumers, their first insurance product is sold to them via a telephone call. It is their very first step onto the insurance ladder and first exposure to the concept of financial planning. For many there will be a natural evolution to more sophisticated products, and a greater propensity for them to seek financial advice as the complexity of their financial portfolios grows.
