Upstart’s personalised policies lift off

Sanlam’s recent acquisition of a 53% stake in BrightRock is a clear sign that the “needs-matched” life insurer has shaken things up in the long-term insurance sector.

The deal, valued at R721m, brings a powerful distribution force to BrightRock, which has relied on independent financial advisers to sell its product. Even on that basis, and notwithstanding the fact that it took financial advisers a while to wrap their head around BrightRock’ s way of doing things, it is the fastest-growing player in its sector.

BrightRock now has more than 4,000 independent financial advisers selling its product and is adding a few hundred more on a monthly basis, says marketing director Suzanne Stephens, who describes 2017 as a “seminal” year for the business.

The might of Sanlam’s agency force is sure to add impetus to BrightRock’ s new business growth. Premiums have grown 62% year on year in 2017,with BrightRock now boasting R982m in  annualised premium income. From a zero base in 2012, BrightRock now covers more than 1-million lives.

The disruption is welcome.

By designing its products in a fundamentally different way to traditional life insurers, a new entrant such as BrightRock shows up shortfalls in existing products, which are often opaque and do not perform in the way the customer is led to believe they will. Yet these are products off which the industry has pocketed billions of rand in premium income over years.

There have undoubtedly been improvements, thanks largely to consumer protection regulations such as Treating Customers Fairly. Competition also spurs change. But products delivering very little value for money are still out there.

It is unlikely that existing life insurance products will “change with you as your life – changes” BrightRock’ s unique selling point, if for no other reason than that it takes 25-million algorithms to
produce a single client quote, says CEO Schalk Malan. This is because each policy document is unique to the client. Even if competitors wanted to copy BrightRock, they would find it exceptionally difficult to get their hands on its product technology , which has drawn international interest.

Why so many algorithms?

BrightRock’ s life insurance product precisely tracks the changes in a person’s financial needs over time, so that policyholders pay only for the cover they actually need at any given point in time.

Cover is specifically matched to meet a person’s household budget needs, childcare needs, healthcare needs, debt needs and so on, in a way that would, for example, account for salary adjustments
and major life changes.

Malan reckons this precision enables individuals to buy 40% more cover on average with each premium rand. The value of premiums paid is never lost: policyholders can move paid up premiums between different needs and insurance events.

The uniqueness of BrightRock’ s product, while compelling, may prove a growth inhibitor in that it is not sold through direct channels.

On the other hand, it is more consumer friendly than most policies, which is rightly working in its favour.

ziadyh@businesslive.co.za

  • This article was first published in Business Day, on 27 November 2017.
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