Johannesburg - Investec launched its life cover product on Thursday, which is aimed at attracting upper income clients with several tailored products to suit professionals, high net worth individuals and entrepreneurs.
The niche financial services company said it plans to offer a fresh, new perspective to long term insurance, which is often seen as a grudge purchase.
The new product offering will be available to the bank’s affluent 77 000 clients in South Africa at first, with the possibility of this being extended to external clients at a later stage.
“We are not trying to be everything to everyone, we are focusing on niche segments”, said Michael Goemans, CEO Investec Life at a media roundtable in Sandton. The new products are all stand alone.
Investec will offer mortgage protection cover to clients who have purchased houses with the Investec Private Home Loan. The premiums will be adjusted downwards every month with the average Investec mortgage client paying off their home loan in just 5-6 years, compared to the average 20 years at retail banks.
The life cover product will allow a client’s family to select either a lump sum pay-out or monthly instalments.
The bank will also offer disability cover, income protection cover and severe illness cover.
Sinenhlanhla Nzama, head product actuary at Investec Life, said this form of insurance is important for the young professionals that Investec private banking targets, such as doctors, lawyers and accountants.
“Cancer is one of the most common diseases and your life can be impacted, no matter how old or young you are”.
Investec attributes technology to its ability to set up the life insurance cover relatively quickly. Goemans said discussions to add the new division began approximately 18 months ago and the bank didn’t have to spend hundreds of millions of rands to develop the product.
Richard Wainwright, CEO Investec South Africa, said it took him just 12 minutes to take out a life insurance policy for himself and he believes this differentiates Investec from other insurers.
“The institutional process is all digital, people answer questions about themselves, as it [computer based technology] learns more about you, and it’s almost artificial intelligence”.
In a sign the banking world is increasingly moving towards disruptive technologies, one in four employees at Investec’s head office in Sandton, works in IT.
Wainwright said the bank spends a lot of time thinking about Fintech and disruption; “Real Fintech will take place within the major financial services intuitions”.
According to the 2017 PricewaterHouseCoopers Insurance Top Issues report, Insurance is the industry most affected by disruptive change.
67% of insurance respondents to PwC’s 2017 CEO Survey see creativity and innovation as very important to their organisations, ahead of other financial services sectors and CEOs in other industries.
Investec growth prospects
When Investec announced in May 2017 plans to launch its life cover, questions were asked whether it was responding to Discovery’s stab at establishing a bank in 2018, rounding out the financial services it currently offers including health insurance, life cover and a retirement fund.
Both Discovery and Investec target affluent clients, but Investec denied it was feeling any pressure to diversify its offering.
The bank has a rewards system currently, but Nzama said they’ve chosen to focus on simplicity with their life cover rather than compete with Discovery’s Vitality rewards programme.
Despite the difficult economic environment in South Africa, Wainwright, who wouldn’t be drawn into commenting on political issues, maintains there is still room for Investec to expand within its niche market.
“There are still segments of growth in the market, notwithstanding what’s going on in the real economy”.
Goemans said it’s still very early days, but they’ve already had a positive response to the life cover offering and he promised they won’t be cold calling their upper end clients, flogging the new product, instead they will target individuals, based on a needs assessment.
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