Product Distribution
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  • June 2023
  • 3 minutes

Current Trends and the Future of Bancassurance in South Africa

  • Jean-Louis Fourie
  • Jared Godwin
  • Neil Parkin
  • Leigh Allen
  • Othmane Akesbi
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In Brief

RGA’s bancassurance survey of South Africa’s leading insurers provides key insights for all markets around the challenges and opportunities created by the digitization of this proven distribution channel. Read more in this article featured in FA News.

From October to November 2022, RGA conducted an online survey around the future trends, challenges, and opportunities of bancassurers in the South Africa market. Six of the largest bancassurers in South Africa participated, representing a majority of the bancassurance market share. 

RGA has conducted the survey since 2010, and although many 2022 results remained relatively consistent with the 2021 survey, the latest survey had new questions around digital acceleration and customer journeys, product and distribution channel development, bancassurance penetration, and partnerships. The results were revealing.

Digitization fuels evolving landscape

As the world has become increasingly digital, insurance distribution has largely followed suit. Yet, while digital channels continue to gain traction, the long-term financial nature of insurance has sustained the ongoing relevance and importance of in-person bancassurance transactions. Survey respondents reported that they plan to focus on a combination of online sales and branch sales, now that COVID-19 restrictions have eased. In other words, bancassurers are eager to engage consumers where they are, whether online, over the phone, at a physical bank, or a combination of all of these. 

Though traditional channels remain vital, the COVID-19 pandemic has accelerated the shift towards digital distribution, and bancassurers have invested in online sales platforms to improve the digital customer experience.

Online applications are now standard, with four of six respondents implementing digital application solutions in 2021-2022 and the other two carriers having already done so. Additional online tools and functions that have become commonplace include digital claims (five of six respondents), e-signatures (four of six), and e-underwriting (four of six).

While all insurers surveyed offer online sales, they also note several challenges to driving digital sales growth. Low straight-through processing (STP) rates were identified within the top three customer journey challenges by three of the six respondents, including two mentions as the top-ranked challenge. Other key customer journey challenges identified include low application start and completion rates (each mentioned by three of the six respondents, as the top- or second- ranked challenges), followed by low customer traffic to online channels (mentioned by two of the six respondents, in the top or third ranks). Despite these obstacles, progress continues. For closing sales originated online, four out of the six respondents cited end-to-end online transactions as their most used option, while the remaining two respondents rely more on outbound telephone engagement to complete the sale.

Growth opportunities spur innovation

Bancassurance remains a dominant distribution channel in South Africa – with more growth potential. Survey respondents reported that among their existing customers an average of 19% own a life or health insurance product, with that number ranging from 10% to 30% across five respondents. Customer segments currently targeted include middle/mass market (five of six respondents), low income (five of six), high net worth (two of six), corporate/small and medium-sized enterprises (two of six), and professionals (one of six). Half of the respondents also acknowledged a focus on capturing other insurers’ customers to drive future growth, a potential indicator of intensifying competition as bancassurers look for ways to gain further market share. Additional customer growth segments identified include Millennials (three of six), the middle/mass market (two of six), high net worth (two of six), low income (one of six), corporate/small and medium-sized enterprises (one of six), professionals (one of six), retirees/seniors (one of six) and impaired lives (one of six). 

At RGA, we are eager to engage with clients to better understand and tackle the industry’s most pressing challenges together. Contact us to discuss and to learn more about RGA's capabilities, resources, and solutions.

Bancassurers are investing in existing and new distribution channels. The channels reported by the respondents as recently added in 2021-2022, or planned, include: mobile apps, outbound sales, external contact centers, independent agents, as well as alternative distribution partnerships with retailers, fintechs, and insurtechs. 

All the respondents are active in product development, across a range of product areas, with a particular focus on simplified issue products. The most popular bancassurance products include funeral expense, life (term, universal, whole), credit life secured (tied to mortgage or vehicle loans), and credit life unsecured (credit cards, loans, etc.). Five of the six respondents reported increased online sales for all these product categories, as well as living benefits products (such as critical illness, accident, and disability benefits). 

Product development priorities

Looking ahead, the respondents identified a range of product development priorities including group risk, investment products, credit life modernisation, and accelerated benefits, among others. Simplified issue products and limited underwriting are the most common priority areas, as indicated by four out of the six respondents. All the respondents reported IT considerations as the top challenge for new product development, due to issues related to prioritising digital transformation, data management and dependence on external providers.

The survey respondents all reported developing targeted product offers to customers leveraging their bank data, such as transaction data, credit scores, total deposits, home ownership and marital status. The targeted offers include:

  • Cross-sell/upsell offers to customers with a predicted higher propensity to buy
  • Reduced or simplified underwriting offers to lower risk customers
  • Lower prices for lower risk customers
  • Tailored offerings based on occupations or professions 

Five of the six respondents also reported using external data sources to aid in underwriting and product development, including medical lab and credit bureau data.

Future goals for bancassurers 

These survey results provide valuable insights into the current trends and the future direction of bancassurance in South Africa. While bancassurers recognize the importance of digital solutions and innovative distribution channels, they also acknowledge they must maintain successful branch distribution. The future goals for South African bancassurers includes looking to address challenges along the customer journey, accelerating the evolution of product propositions, and exploring growth opportunities, both within and outside the bank.

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Meet the Authors & Experts

Jean-Louis Fourie
Business Development, Actuary, RGA South Africa
Jared Godwin
Jared Godwin
Business Development Actuary, RGA South Africa
Neil Parkin
Neil Parkin
Head of Business Development, RGA South Africa
Leign Allen
Leigh Allen
Associate Vice President, Strategic Survey Research, Global Actuarial Pricing and Research 
Othmane Akesbi
Othmane Akesbi
Vice President, Business Initiatives,  Global Accounts

Additional Resources

Reprinted with permission from FA News.