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South Africa’s corporates across industries are embedding insurance products into their core offerings to unlock new revenue streams and deepen customer relationships in a highly consumer-centric era.These are the views of Willem Smith, chief commercial officer at Hollard, who said retailers, banks and platform businesses have already demonstrated the playbook.“The likes of Shoprite, Edgars and TFG, to name but a few, have integrated insurance into their money market ecosystem in partnership with an insurer or by utilising a cell captive. The likes of MTN offer a range of insurance products, including device cover,” Smith said.“Brands such as Apple and Samsung have also invested in insurance-related products in order to protect customers and enhance their overall value offering. “Capitec launched its insurance offering to extend customer value within its core banking relationship, using simple, app-based onboarding and affordable pricing to drive rapid uptake. FNB has gone further, embedding life and short-term insurance into its digital banking platform as part of a broader integrated financial services strategy.”It is not only retail groups and banks that are evolving, as value-added services become a key pillar in maintaining consumer loyalty.Retail groups and telecommunications groups have refused to “stay in their lane” as consumer needs evolve. South Africa’s retailers, telecommunications and insurance groups are also encroaching into the banking space.Pepkor is set to launch a bank next, in a move that will see it leverage its 6,000-branch network and an army of 32-million customers to disrupt the mass-market retail banking sector, where Capitec sits on top of the pile.Old Mutual has also launched its bank, OM Bank, while Sanlam is deepening its ties with GoTyme, eyeing transactional banking capabilities, which will culminate in the launch of a “super app” this year.Smith said the insurance space is an appealing one for retail groups because under South Africa’s regulatory framework, underwriting insurance risk must sit with a licensed insurer. “However, corporates can still build a meaningful insurance business by partnering with a licensed player and operating through distribution or outsourced or structured models. The insurer retains regulatory responsibility and capital requirements, while the corporate owns the customer relationship and channel.“This has enabled a wide range of corporates to move into insurance without the cost, complexity and time associated with building a licensed insurer from scratch.“For larger corporates, cell-captive structures — widely used in South Africa — offer a step change in economics. A cell captive allows a corporate to participate in underwriting profits (and losses), build tailored products for its customer base, and access reinsurance and pricing capability as well as operate within a licensed insurer structure without owning a full licence.”South Africa’s financial services sector is set to get more dynamic as the South African Reserve Bank moves to reform the country’s national payment system and allow fintech companies to plug in without needing a sponsor of a major bank to do so.The likes of MTN and Vodacom have already built sizeable fintech franchises, conducting billions of rand in daily transactions, while MTN and Vodacom also target the small business lending market."
