Solvency, a new emerging financial services company, was founded by Mutoda Mahamba.
He is also the CEO of the company, which is 100% digital and underwritten by GENRIC Insurance Company. A former insurance executive, Mahamba worked at various South African insurance brands for over a decade.
Through his actuarial and product development work, he saw the opportunity to create a financial product that empowers consumers while still equipping them to manage the risk of negative life events, from burglaries to a car being written off.
According to Mahamba, Solvency will disrupt the status quo in the country's insurance industry by offering an Insurance Savings Account (ISA) that is funded through car and household insurance premiums.
He said even during the launch phase of his product, the response from the market had been very positive and consumers especially like the savings opportunity offered.
"The Solvency solution offers crucial insurance cover combined with an easy and structured way to save and invest," Mahamba explains his entrepreneurial idea.
"It is a unique product that helps South Africans deal with two vital challenges: protecting themselves against claims and saving for the future."
He says the average short-term insurance client claims an average of R18 000 every four years.
"With an insurance premium of R1 000 per month, and without considering escalations, the client would have paid almost R50 000 in premiums over this time," he explains.
"Up to nine out of ten clients will claim far less than the premiums paid, or not claim at all, but receive nothing in return. Solvency changes this and puts that money to work."
For Mahamba, the Solvency website is a key feature. It offers easy-to-use features that allow anyone to asses exactly how much they can save and a quick sign-up process.
Clients choose how much of their monthly premium (up to a maximum of 50%) goes to their ISA, like the medical savings components on medical aids.
The decision is guided by how much excess the client is prepared and able to pay in the event of a claim. The excess is paid from the ISA and should the funds in the client's ISA not cover their excess payment, only then would the client need to pay the difference from their own pocket.
Whether or not the client makes a claim in a year, they have the option to withdraw in cash up to 50% of their savings in a 12-month period, for their own use. Alternatively, they can leave the money invested to grow and earn money-market rates.
Solvency also includes two other innovations. The BetterDrive Savings Booster allows clients to self-manage their premium and cash-back rewards through responsible driving. The driver can receive up to 25% of cash-back spent on premiums every three months, which is paid into the ISA.
The Pay as you Ensure feature sees the consumer pay premiums for insured items which they need cover for in a particular month only. The premium for items for which cover has been "switched off" is allocated to savings.
* Compiled by Carin Smith