- BrightRock paid as many claims in Rand terms in 2021 as it did in its first seven years in business.
- The insurer said the third wave, driven by the Delta variant, hit its individual clients particularly hard.
- But despite this bad experience so early in its history, BrightRock wants to take more market share from big insurers.
In 2021, BrightRock paid as many death claims as it did in the first seven years of its existence. The young life insurer, in which Sanlam acquired a majority stake in 2017, covers almost 2 million lives, but it paid out R1.25 billion in claims in one year. This was more than half of its total annualised premium income of R2.03 billion.
In the nine years to December 2021, BrightRock paid R3.6 billion in total claims. When excluding the 2021 claims, this amounts to less than R300 million in average claims per year.
Although the surge in claims was partly attributable to the growth in customers covered, BrightRock CEO Schalk Malan said on a "normal year", the company would still expect to pay between R500 million and R600 million in claims. The pandemic thrust the insurer into a space it never imagined navigating so early in its lifespan.
"Wave three, the Delta variant, was really significant, especially on our individual underwritten life business," said Malan.
Like many other insurers, BrightRock found the Omicron wave less severe in terms of claims, despite bringing the highest infections with it. BrightRock is preparing for a fifth wave in the middle of the year, but this doesn't mean it's that's the last rise in Covid-19 infections it's expecting.
"Can we guess and say multiple waves? I think Covid-19 will become part of life in due course, like common flu," said Malan.
He added that thanks to its "robust" reinsurance and support from its majority shareholder – Sanlam – the company has sufficient capital to navigate this challenging period.
"The problem is that you can't really plan for waves… But we feel confident that we are in a positive space," added Malan.
But like big insurers, BrightRock is reviewing its underwriting policies for the unvaccinated. The insurer wants to make sure that the new business it writes and premiums it offers clients are sustainable in the face of the unknown Covid-19 risks.
"But that's not because insurers are trading back. We are not saying because we paid out R1.25 billion of claims last year, we've got to make it up. Those costs have been accounted for. This is more about the outlook going forward and how things will be normalising," said Malan.
Growing market share as people shop around
Despite the rude awakening regarding claims in 2021, BrightRock is determined to grow its market share even more.
In 2021 the total cover that its individual life, group risk, and funeral cover customers had in place exceeded R380 billion, up by 8.5% from 2020.
The insurer said it seems that the pandemic has made people think differently about life cover. They have been buying more. But they are cash-strapped and are looking for a Rolls Royce on a Polo budget.
Malan believes this is Brightrock's time to shine because its 'needs-matched' insurance "eliminates a lot of wastage". So it's looking to take an even bigger slice of market share from established insurers.
"We eliminate a lot of waste because, with other insurers, people buy some cover that's not needed later down the line. We are sitting in a very unique situation as a business," said Malan.
The insurer said its market share has doubled over the last four years in terms of new business sales. The company used to sell its insurance only through independent brokers. But it has now built its own adviser force to only sell Brightrock's products.
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