South African personal insurance penetration has been relatively stagnant at around 11% to 14% over the past few years. Firstly, because the market is mature and dominated by contenders supplying relatively similar products, and secondly, because consumer expenditure is under pressure due to slow economic growth and high levels of unemployment.
Sanlam has however developed an app, called Go Cover, which might just have what it takes to breathe new life back into this market. Jack Kruger, design lead at the Sanlam Group, says the app was built on observations of how the digital era was transforming business: “We identified the unbundling of services, a move towards micro-services and services being available on demand as major trends behind contemporary digital business models, such as Airbnb, Uber and WhatsApp.”
By applying this to insurance, the company developed an insurance cover app, allowing users to buy accidental injury cover, on demand, from 24 hours to an extended 30-day period, via smart technology. The cover can be activated immediately or at a precise future date and time within 30 days. For example, one can buy 14 days of cover and set it to automatically begin next Tuesday at 09.30AM.
“All you have to do, is download the Go Cover app from either the Google Play Store or the Apple App Store, sign in, and enter your details once – which should take less than five minutes. From there, subsequent cover can be bought and activated in a matter of seconds,” Kruger says. “With client permission, we do make limited use of the device’s location to enable cover and also to enrich the user experience. We use geo-fencing to send appropriate notifications and information.”
Instead of complicating things, it was decided to only offer three levels of cover. For 24-hour cover, a premium of R10 gives cover of up to R100 000, R20 for up to R500 000 or R30 for up to R1m. The daily rate decreases as the period extends.
Keeping the insurance accessible and affordable also turned into one of their biggest challenges in making the cover work, as collection costs can amount to a substantial proportion of the premium. “We are looking at ways to reduce these costs through partnerships,” Kruger says.
Claiming is relatively hassle-free and can be completed online. Claimants have to submit an identity document, hospital and doctor information, and proof of a bank account.
A police report might be necessary if the injury is crime-related or involved a vehicle accident, while a death certificate is required in the case of accidental death. Cover is not extended to people involved in criminal activities or self-harm.
Where insurance is traditionally risk-adverse, penalising people who take part in a range of outdoor activities, Go Cover is revolutionary as it openly accommodates people who will encounter an activity that may be perceived as adventurous or risky. As such, it is ideal for weekend warriors who participate in mountain biking, paragliding or trail running, or even professional sportspeople.
Go Cover is further suited to people who require a degree of workplace protection – either for themselves or their employees. “A business owner might pay to cover her engineers periodically deployed on a skyscraper, or a farmer to cover seasonal workers, instead of longer-term products. One of our clients, for example, is a helicopter pilot and uses it when he does crop spraying,” Kruger explains.
It could also be used as a form of travel insurance. “People might use it when they are on the road, especially during the Easter or Christmas holidays when there is an increase in road accidents,” Kruger says. “South Africans can activate and use the cover overseas, but foreigners, so far, may only use it when they are in South Africa. Go Cover is open to everyone and does not have an age limit.”
The first Go Cover app only caters for individuals, but the company is in the process of diversifying the product to also cater for families or groups, in a single purchase. The application is also being unbundled further to provide cover for specific sports and outdoor activities. “The risks involved in various sports are different. There’s less benefit in offering a mountain biker cover against accidental drowning,” Kruger explains.
Go Cover is not intended to replace comprehensive medical aid or life cover. “Go Cover is intended to be a frictionless, instant add-on to what users may already have and will pay out on top of any other insurance,” Kruger says.
“The taxi industry in San Francisco, for example, seemed to be stagnant and mature with a revenue of about $150m per year. Uber, even so, managed to break into this market and grow its revenues to $500m per year in only three years. By unbundling insurance and making it available on demand, we are hoping to similarly grow the local insurance industry.”
This article originally appeared in the 19 January edition of finweek. Buy and download the magazine here.