In a mere five years, BrightRock has managed to carve out a strong position for itself in the fiercely competitive insurance industry. How has the company so successfully taken on powerful and entrenched competitors? By GG van Rooyen
- COMPANY: BrightRock
- PLAYERS: Leopold Malan, Suzanne Stevens, Schalk Malan and Sean Hanlon
- ESTABLISHED: 2011
- ANNUALISED PREMIUM INCOME (API): R595 million
- VISIT: www.brightrock.co.za
The South African insurance sector didn’t perform particularly well during the 2015/2016 financial year. In fact, the industry posted below-inflation growth of around 4.5%. Compare this to the year-on-year growth that BrightRock enjoyed over the same period – a staggering 72% – and you realise that the founders of the company have accomplished something very impressive. BrightRock has established itself in an industry that is capital intensive and dominated by entrenched players. How have the four company founders managed this?
Changing the game
Sectors such as financial services and insurance can seem impossible to upend, expecially when you take a moment to consider the obstacles. There are powerful players who have been playing the game for a long time, and you are dealing with potential clients who often don’t even really understand what they’re buying into. Products can be complex, so educating people on how your offering is different isn’t always easy.
“It’s often said that the insurance industry is quite innovative, but when you really look at it, you realise that policies have been looking pretty much the same for a long time now,” says BrightRock co-founder and executive director of distribution Sean Hanlon. “All four of us had been in the industry for a long time, and we realised that things could be done very differently. There was a market for a different kind of policy.”
Leopold Malan, executive director of processing adds: “When we started BrightRock, we wanted to bring about change in the industry by providing cover that is both relevant and appropriate to each and every individual client, and continues to match the needs of clients as their lives change. Four years after our market entry, we are pleased to see the subtantial take-up of our need-matched product offering. The flexible design in our cover also allows for us to provide up to 48% more cover for the same premium, allowing greater affordability initially and over the long term.
“In our first year, 47% to 53% of our policyholders wanted traditional, lump-sum cover. However, an overwhelming 71% of our policyholders now opt for needs-matched insurance through product options that allow them to shift their cover as their needs change.”
BrightRock entered into a saturated market, but it approached the industry in a unique way. In a sense, it created its own playing field.
This is a good example of how a traditional industry can be disrupted. Moreover, it shows that disruption need not necessarily be driven by technology. Disruption can be created just by tweaking exisitng offerings. A new company like BrightRock doesn’t have a massive legacy and loads of exisiting clients that so often lock a large business into its existing model. The important thing, though, is to take advantage of this freedom – to not simply fall into existing patterns of doing business. Starting a new company offers a unique opportunity to reassess the way in which things are done, and to change it.
Educating the client
Whenever you offer a completely new way of doing things, prospective clients need to be educated and shown why “new” is in fact also “better”.
As mentioned, it took a while for BrightRock clients to adjust to the company’s new offering. So how did BrightRock manage to change clients’ minds?
Well, the company was savvy in the way in which it marketed itself. Right from the start, it realised the need to create clever marketing content that explained its offering.
“Bringing a new brand with a new way of doing things to the market isn’t easy,” says Suzanne Stevens, executive director of marketing. “Educating the consumer is a tough task, and we knew that we couldn’t outspend our competition. To address the issue, we designed a marketing model that started with a content-based approach on platforms we could own. For example, we built a green-screen studio in-house and partnered with journalist Ruda Landman to create videos that explored the change moments in people’s lives. This was a good way to look at insurance in a personal way – to make the implications of insurance real, and to show how life changes dictated insurance needs.”
The campaign was so successful, that BrightRock eventually sold the idea to kykNET as a show called VeranderDinge.
BrightRock also made the decision to try to do away with much of the jargon and complexity often associated with insurance policies.
“We made sure that all materials were simple and easy to understand,” says Stevens. “We also endeavoured to make the claims process as hassle-free as possible and to allow a client to speak to a human being whenever they wanted. In the end, it all came down to empowering the client to have a meaningful conversation – to understand our offering and ask pertinent questions.”
When it came to selling its policies, BrightRock decided to go with independent brokers who sold various policies.
“We wanted our offering to prove itself,” says Schalk Malan, actuarial executive director. “We wanted experts in the industry to be able to compare our offering with those of others, and let it speak for itself. We were confident that we had a product that could stand on its own and benefit from comparison.”
Key to the success of BrightRock has been its ability to scale successfully. It is something many companies struggle with, since quick growth leads to increased complexity. Managing this complexity is key.
“There are great advantages to being a new-start-up,” says Hanlon. “When you’re small, you can react quickly. As you grow, though, this becomes harder. With this in mind, we made the decision to put systems in place early on. And having spent time on it from the beginning, we were able to grow quickly.”
“We focused on creating a simple platform that was accessible enough to be used both internally and externally. It was all about stripping out unnecessary complexity, since this would slow down the on-boarding process, both in terms of new clients and new employees,” says Stevens.
Leopold Malan is quick to add, however, that systems and processes can only take a start-up so far. “It takes a good five to ten years to thoroughly implement the systems and processes needed. It is not a simple task. This means that, during the first few years of doing business, your systems will let you down. And when this happens, you need good people in place who can take up the slack.”
BrightRock’s founders have been careful to place the A-players and experienced managers needed to manage growth.
“When it comes to scaling, you’ll often find that it’s the human capital element that limits growth. You can grow your client base quickly, but you need good people who can actually manage the workload. Getting new clients is great, but you need to be able to retain them,” says Hanlon.
- Don’t be drawn into doing things the way the industry has always done them. A new company has the power to do things differently.
- Educating consumers in a clever way is crucial when bringing a unique offering to market.
- Systems and processes are important, but try to stay as agile as possible. Don’t let red tape throttle growth.
- Have the right people in place who can help you keep growing, even when your processes let you down.
This article was originally published in the November 2016 edition of Entrepreneur magazine.