BrightRock CEO Schalk Malan appeared on two television shows to share consumer tips about recession-proofing your finances.
Schalk first appeared on CNBC’s Open Exchange on Tuesday morning, 22 June 2017:
This was followed by an interview on eNCA’s Moneyline on Wednesday evening, 23 June:
SA is seen as tops for life insurance innovation and BrightRock’s flexibility fits the bill, writes Stephen Cranston.
Product complexity in insurance is one thing and it was what made the old universal life policies so confusing. It was hard to work out if these multiheaded hybrids of protection and savings were good value for money.
But there is also product sophistication, when highly customised technology can add something new and desirable to the product range.
BrightRock falls in the sophisticated rather than the complex bucket. This insurer was formed in 2011, at a time when there was a race to the bottom as plutocrats such as Douw Steyn turned life cover into a commodity.
BrightRock was founded by a multidisciplinary team, some of whom wanted another challenge after the big company atmosphere at Discovery. No company in the world runs its policies in the same way as BrightRock. As CEO Schalk Malan puts it, it is a needs-matched approach.
A traditional life policy combines all cover in a single capitalised lump sum, which might be fixed or grow at a set rate over time. The trouble is that some financial needs exist only for a few years, others last a lifetime. So why should you pay for cover you don’t actually need?
You might have heard of BrightRock from its sponsorship of the Stormers as well as from some chat shows it sponsors on SuperSport and kykNET. But you won’t see it much on peak-time conventional advertising slots. I sometimes think Willem Roos of OUTsurance has bought all the slots there and sells them on to competitors when he is feeling generous.
Anyway, BrightRock quite rightly doesn’t believe its product set is appropriate for direct sales. It is sold through 3 800 accredited financial advisers, who gathered R6100m in premium income in 2016.
BrightRock’s key selling point is that it strips out wasted cover to deliver premium savings. And you never lose the value of your savings: when needs fall away you move your premium to buy more cover for a different need, say from death to disability. And if the client needs more cover, he can reserve future years and take it up when needed.
A feature that impresses me is the ability to make a choice on how to take on disability or critical illness cover at claims stage. It is hard to know at the inception of a policy whether a guaranteed income or a lump sum is more important. Expected longevity and severity of the condition need to be taken into account.
At BrightRock, the client does not have to choose upfront but can decide if income, a lump sum or a combination of both is the right approach.
BrightRock provides a graphic with six kinds of needs ranging from household needs, which are likely to grow at least at the rate of inflation, to healthcare, which tends to grow ahead of inflation, as would unpredictable costs of illness or injury and death-related needs such as estate duty and bequests.
In contrast, debt – such as bond and car payments and personal loans – should eventually come to an end, as should childcare costs. Each of these financial goals is provided for by a distinct tranche of the policy, each of which has its own termination date and is disclosed in the written updates.
I was interested to see that SA is seen as the most innovative life insurance territory, accounting for 46% of the votes in a recent Munich Re survey. Australia scored a feeble 6%. But in spite of this there is an inefficient pricing structure here and the policies can’t adapt to clients’ changing needs. It is hard for clients to alter their cover in what BrightRock calls critical change moments.
Marketing director Suzanne Stevens points to a real case in which BrightRock proved to be a better option than any of its competitors. A teacher just 38 years old tool out a policy in May 2014 worth R5.5m for disability and dread disease. In September of that year she went into a coma from pneumococcal meningitis and died eight days later. Under the ruling that most life offices follow, if a client dies within 14 days of an “event”, such as a stroke, the policy pays nothing. The only exceptions are Discovery Life, though it would have given less disability cover for the same premium, and Liberty, which would have paid somewhat less than BrightRock for disability and paid nothing on dread disease. But life offices such as Old Mutual, Momentum and Sanlam would have paid absolutely nothing. Is that treating customers fairly?
Karl Leinberger, the chief investment officer of Coronation, seems quite defensive on the topic of long-term investment. I am not sure why, as the Coronation Equity Fund in its 20-year existence has added 60% to the all share index return. Some people see talking long-term as a way to buy time in a poor year such as Coronation experienced in 2015. And quite a lot of mediocre fund managers do ask clients to wait for the long term even though they are doing badly.
Leinberger has probably added as much value from the shares he hasn’t picked than from the shares he has. He showed a slide from the 2008 road show in which he explained why he did not own Murray & Roberts, then seen as bulletproof because the infrastructure boom around the Fifa World Cup was in full swing. The share has since gone from R110 to R11. Leinberger says that in a time of lower returns it makes even more sense to invest with an active manager.
Of course he would say that, but it seems fair enough to argue that skill becomes more valuable in challenging times. In fact good managers often do more alpha (excess return) in weak markets than in bull markets. Just look at Allan Gray, which routinely adds almost all its alpha in bad markets.
I am a strong believer in giving fund managers a balanced mandate instead of trying to juggle the whole range of different asset-class building blocks in a fund. Leinberger makes the point that a balanced manager can make asset allocation decisions in real time – no need to wait for approval at the next trustee meeting. The manager needs to understand the total portfolio, the rand hedge position across asset classes on a see-through basis, the total interest rate holdings and the total inflation hedge.
* This article first appeared in the Business Day of 10 February 2017. Click here to read the original version.
Business Day TV’s Alishia Seckam interviewed BrightRock’s Schalk Malan and Sanlam’s Hennie te Villiers about Sanlam’s intention to acquire a majority stake in BrightRock:
This interview was originally broadcast on Seckam’s Taking Stock-programme on 26 January 2017.
Sanlam het ’n meerderheidsbelang van 53% in die lewensversekeringsmaatskappy BrightRock gekoop vir ’n bedrag van tot R707 miljoen.
Die finansiëledienstegroep het Woensdagmiddag op die JSE se Sens-nuusdiens aangekondig die transaksie is nog aan regulatoriese goedkeuring onderhewig.
Hennie de Villiers, adjunkhoof van Sanlam Persoonlike Finansies, sê noulettendheidsprosesse is reeds afgehandel. Die transaksiebedrag sal afhang van presies wanneer dit finaal goedgekeur kan word, maar dit sal nie meer as R707 miljoen wees nie, mits die transaksie in die eerste helfte van die jaar beklink word.
Sanlam sal dit uit sy beskikbare kapitaalbronne finansier.
Volgens De Villiers is die verkryging deel van Sanlam se strategie om winsgewende en volhoubare groeigeleenthede te soek, en dit beklemtoon ook die groep se verbintenis om steeds in Suid-Afrika te belê.
Sanlam het die afgelope jaar of wat groot transaksies buite die land gedoen, soos die koop van die belang in Saham Finances wat in die res van Afrika sake doen, asook sy beleggings in die Indiese finansiëledienstebedryf. Sanlam het in Desember sy belang in Saham Finances van 30% tot 46,6% opgestoot.
Volgens De Villiers het BrightRock ’n sterk teenwoordigheid in die plaaslike mark opgebou. Die onderneming sal voortgaan as ’n onafhanklike onderneming met sy eie bestuurspan, handelsnaam en lewensversekeringslisensie.
Schalk Malan, hoof van BrightRock, sê sy onderneming het sterk gegroei sedert dit in 2011 begin is, en dit bied nou dekking van R148 miljard en kry jaarlikse premie-inkomste van meer as R611 miljoen. Die Lombard Insurance Group wat die aanvangsbeleggers in BrightRock was, bly aan as aandeelhouers, maar Malan is nie in ‘n posisie om te sê wat Lombard se belang in die onderneming voor en na die transaksie is en sal wees nie.
BrightRock se produkte is tot dusver slegs deur onafhanklike makelaars verkoop, maar sal voortaan ook via Sanlam se finansiële adviseurs en makelaars beskikbaar wees.
Sanlam se aandeelprys was Woensdagaand 0,43% hoër op R66,03. - Francois Williams
Hierdie berig is oorspronklik op Netwerk24 en in Die Burger gepubliseer. Lees die oorspronklike berig hier.
Sanlam has clinched the first major deal on home soil in a while, agreeing to acquire a majority stake in smaller insurer BrightRock for up to R707m.
Sanlam’s life insurance subsidiary will purchase 53% of the needs-matched insurer, valuing BrightRock at about R1.3bn. BrightRock offers products structured to adapt as each client’s needs change throughout life.
Hennie de Villiers, deputy CEO of Sanlam Personal Finance — the insurer’s South African retail cluster — said the deal was testimony to Sanlam’s commitment to invest in SA.
“Sanlam’s acquisition of a majority share in the company is in line with our strategy to seek profitable and sustainable growth opportunities,” he said.
The deal is still subject to regulatory approvals.
Sanlam concluded its last domestic deal of this size in December 2015, when it bought a 28.7% interest in healthcare administrator Afrocentric Healthcare Assets for R703m.
The purchase price for just more than half of BrightRock, which brings in R611m in annual premium income, has not raised eyebrows. “As the maximum purchase price of R707m only represents 0.5% of Sanlam’s market capitalisation, it won’t initially impact Sanlam’s results very meaningfully,” said Adrian Cloete, an analyst at PSG Wealth. “The transaction is also a profitable and sustainable growth opportunity that should give a much superior return than the investment return that the R707m is currently earning.”
This news report was published on Thursday, 26 January 2017. Read the original news report here.
Executive director Leopold Malan was interviewed by David O’Sullivan on his Joburg PM-show on Hot 91.9FM about what it takes to start your own business, and how to equip it for a success story like the BrightRock success story. The interview was broadcast on Thursday, 8 December 2016 at 18:30 – listen to it below:
The 1st of December 2016 marked the 28th time that the world observed World AIDS Day. While South Africa has the highest prevalence of HIV/AIDS in the world, with over six million people living with the disease in the country, the country has come a long way towards treating people living with HIV.
Better access to antiretroviral (ART) treatment and more medical information about treating HIV have enabled those living with the condition to live longer and have a better standard of life. in a bid to increase their offering, BrightRock recently announced that it will now be offering needs-matched insurance solutions for people living with HIV.
While there are some medical insurance companies that focus specifically on providing life insurance cover to HIV positive people, traditional insurers haven’t had products for HIV positive people until recently. BrightRock is committed to giving cover to as many South Africans as possible and are pleased to be able to extend needs-matched product to people living with HIV.
HIV positive people who have been on treatment for at least six months, have a viral load of less than 400, a CD4 count of more than 200 and aren’t suffering from any AIDS defining condition, like tuberculosis (TB), will be able to access this cover. This will hopefully be the first step in more and more insurers offering cover for people living with HIV.
The company is encouraged by the developments they have seen in the past few years in the prevention and treatment of HIV/AIDS. People living with HIV can now live relatively healthy lives and this condition is now seen more as a chronic condition that can be managed easily.
While finding a cure for HIV/AIDS still seems like a distant dream, there’s progress being made towards finding a vaccine. The International AIDS Conference (AIDS 2016), which was held in Durban in July this year once again brought sharp focus on where we’re going towards treating HIV in the future.
Deputy Director of the Desmond Tutu HIV Centre in Cape Town, Linda-Gail Bekker, announced at the conference that 5 400 HIV-negative people across South Africa would be testing a new HIV vaccine called HVTN 702. This vaccine, which will be trialled on people between the ages of 18 – 35, is specifically designed for South Africa and will run for three years. Participants will receive five injections over the course of a year and will be followed-up for two years more to establish whether the vaccine has a sustained protective effect. If the vaccine is successful, it will be the first preventative vaccine in the world.
This is good news for the country and the world as the rate of new HIV infections is still alarmingly high – 2.1 million people were infected with HIV last year alone. Even so, the amount of research being done all over the world to try and end HIV is encouraging and hopefully the world will achieve the United Nations goal of ending the AIDS epidemic by 2030. Until then, BrightRock will continue to try and find solutions to help HIV-positive people protect their families financially should they be permanently disabled or die.
This article was originally published online by Risk Africa Magazine. Click here to view the original.
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
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.
This article was originally published in the November 2016 edition of Entrepreneur magazine.
Trail-blazing insurance player BrightRock recently achieved a major milestone when its cover in force exceeded the R100 billion mark (as at 30 September). This was achieved in just over three years from its market entry, confirming BrightRock’s status as South Africa’s fastest growing provider in the intermediated individual risk market.
“We believe that our needs-matched, client-centric approach to insurance cover has been the driving force behind our exponential growth,” explains Schalk Malan, Executive Director at BrightRock. “While the South African insurance industry as a whole has remained stagnant over the past year, our positive growth trajectory has seen an 89% increase in year-on-year gross premiums billed.”
The company has also paid out more than R125 million in claims since it started operating in March 2012, reflecting its philosophy of comprehensive and certain cover.
“Claims certainty is a central principle of our needs-matched approach. We’re proudly paying claims that traditionally would not have been paid or been paid at a lower level. We’ve found that our transparency, objectivity and clear criteria have gone a long way to give clients peace of mind about how their claim will be assessed and paid,” emphasises Malan.
“The success of this approach is clear from our strong new business growth, and our competitors have definitely taken note. One or two have recently introduced benefits that seek to emulate some of the features we introduced to the market, but none have been able to replicate the flexibility, efficiency and claims-certainty that BrightRock’s unique needs-matched product offers.”
BrightRock is set to build on its strong, differentiated product platform, with several new product enhancements, effective from 1 November 2015.
“Again, with the new features we’ve introduced, our focus has been on increasing claims certainty and clarity for our clients, by expanding the spectrum of claims we cover,” notes Malan.
This has no impact on the client’s additional expenses cover, which fully reinstates immediately. This market first for the insurance industry is currently pending patent registration locally with international patent applications to follow. “BrightRock policyholders without a doubt enjoy the most comprehensive cover for additional expenses available in the market today” says Malan;
“The Personal Job Fitness Test has always provided an occupational underpin to the clinical criteria, providing pay-outs where a client is unable to work in their own specific occupation because of an illness or injury. BrightRock now also offers an additional, stated occupational underpin in the form of the new Job Fitness Test.” Malan says this transparent, objective test uses a points-based system to evaluate a client’s ability to do the work that someone in their stated occupation would typically do. “The assessment criteria are disclosed upfront to ensure transparency – a market first – so clients know from the get-go exactly how their claim will be assessed,” explains Malan. As an example, an accountant who loses the ability to speak (severe inability to produce or comprehend language symbols) would qualify for a 100% pay-out.
The updates on BrightRock’s performance and the launch of these enhancements formed the basis for a recent nationwide series of update sessions attended by over 1 000 financial advisers, who have welcomed the increased certainty BrightRock has created for their clients.
“In the past three years, BrightRock has laid strong foundations for our future growth, and we’re excited to see the impact our product thinking has had on the market. We are looking forward to further building on these successes through the new product features , which will come online on 1 November 2015 and, we hope, will prove to be another game-changer for our industry,” concludes Malan.
Dit klink miskien morbied, maar die meeste mense dink aan lewensversekering as ’n groot bedrag geld wat uitbetaal as jy doodgaan of ernstig beseer word.
Schalk Malan, uitvoerende direkteur van BrightRock, sê lewensdekking is vir baie mense ’n abstrakte konsep.
“Dit is ’n lang syfer soos ’n telefoonnommer en die meeste mense weet eerder wat hul maandelikse premie is as hoeveel dekking hulle regtig het.
“Of hulle weet hulle het R5 miljoen se dekking. Dit is egter moeilik om daardie R5 miljoen om te skakel in daaglikse uitgawes om te weet hoeveel dekking jy regtig nodig het.”
Hy sê die manier waarop oor lewensdekking gepraat word, maak dit ook moeilik om te verstaan.
“Gesprekke oor ‘gevreesde siektes’ en ongeskiktheid vind gewoonlik plaas in ’n taal waarin gewone mense wat nie in die finansiële sektor werk nie, nie kan saampraat nie.
“Dit is moeilik om tred te hou met hoeveel dekking jy het as dit uitgedruk word in terme van wat met jou moet gebeur voordat die versekering uitbetaal, met ander woorde ‘as dít gebeur, dan kry jy soveel’.”
Malan sê die eerste stap wanneer jy lewensversekering uitneem, moet eerder wees om te vra wat jou regtig bekommer en waarom jy in die eerste plek lewensversekering wil uitneem.
Is dit om te sorg dat jou skuld betaal word as jy sterf of om te verseker dat jy ’n inkomste het as jy beseer word?
Hoeveel dekking het jy nodig?
Hy sê dit is makliker om eers jou huishoudelike uitgawes op te tel en dan lewensdekking te kry wat dit moontlik maak om dié uitgawes te kan betaal, as om te probeer bepaal of ’n groot bedrag genoeg is.
“Jy moet kan verstaan dat jy eintlik R15 000 per maand gekoop het om van te leef en of dit genoeg is om jou huidige lewenstyl te handhaaf. Dit maak dit ook makliker om te verstaan dat jy dalk minder dekking nodig het vir ’n besering omdat jy weet jou maatskappy sal nog vir ’n paar maande jou salaris betaal.”
Malan sê wanneer mense verstaan dat lewensversekering hul uitgawes in sekere moontlike situasies moet dek, besef hulle ook dat hul behoeftes mettertyd verander.
“Op die oomblik benader die meeste lewensversekeraars in Suid-Afrika die probleem deur te sorg dat jy ’n inkomste het as jy dalk ongeskik verklaar sou word, soos volg:
“Hulle sê jy het nog 20 of 30 jaar oor wat jy sou kon werk, so jou lewensversekering moet 20 of 30 jaar se salaristjeks kan dek. Dan bereken hulle die waarde van hierdie salaristjeks en sê jy het byvoorbeeld R5 miljoen se dekking nodig.”
Hy sê tradisionele lewensversekeringsprodukte maak jou vas op dekking van R5 miljoen en dié bedrag groei elke jaar totdat jy eendag aftree of die versekeringspolis kanselleer.
Die probleem met dié benadering is tweeledig.
Eerstens betaal polishouers uit die staanspoor die verhoging wat hulle in ’n latere stadium in hul dekking gaan sien. En tweedens word die getal salaristjeks wat jy oor het voor aftrede, elke maand minder.
“Dan word 20 jaar se tjeks tien jaar s’n en later vyf jaar. Dit beteken jy mors verskriklik baie geld deur steeds dekking vir 20 jaar se salaristjeks te hê as jy al oor tien of vyf jaar aftree.
“Ons navorsing toon die meeste kliënte wat hierdie produkte koop, verminder uiteindelik self hul dekking of kanselleer die polis, want hulle doen saam met hul finansiële adviseurs die somme en sien hulle het nie regtig soveel dekking nodig nie.”
Baie mense het egter teen die tyd dat hulle hul dekking verminder het, reeds ’n klomp geld in die water gegooi.
“Ná vyf of tien jaar kom ’n makelaar na jou toe en sê hy kan jou maandelikse premies met 50% of 60% verminder. Wat mense dan vergeet, is dat jy eintlik oor die jare 50% of 60% te veel betaal het vir dekking wat jy weet jy nooit gaan gebruik nie.” - Mari Blumenthal
* This article was originally published in Rapport’s business section (Sake Rapport) on 27 September 2015. It’s also available on Netwerk24.