South Africa: Race for Low-to-Middle Income Consumers Heats Up in SA's Insurance Industry
SA's financial services sector is in for a shake-up. Discovery Bank, TymeBank and Bank Zero, which are underpinned by technology, will change the way in which people bank. In the process, they will challenge the dominance of the big four banks. The boring insurance industry will also reform, with the emergence of new players, African Rainbow Life and Sithega Holdings, which want to serve low-to-mid income consumers.
For many years, SA's insurance industry that targets low-to-mid income consumers has largely remained the same.
A full spectrum of innovative and flexible financial services products including life insurance and dread disease cover, saving and investment vehicles have been the exclusive domain of higher-income consumers. After all, insurance companies often prefer these consumers as they are perceived to have a less risk profile by underwriters and pay higher monthly premiums, thus boosting their profit margins.
Meanwhile, low-to-middle income consumers, known as the mass market, have been saddled with entry-level and narrow funeral cover. That's as far innovation goes for this segment.
However, this will soon change.
In the past few months, two black-managed financial service firms have launched, with a renewed focus to serve the mass market with innovative and affordable financial services...
Source: All Africa