Instant Life is seeking expansion opportunities across the African continent. The South African online life insurer is planning to leverage the brand of its parent company, Absa, to grow its business locally and on the continent. By Gugu Lourie
Instant Life, which employs 65 people, has developed a tele-underwriting methodology that caters for 99% of lives to be underwritten online or through a telephonic interview that is backed up by an interactive underwriting decision.
The online insurer – which is offering life, disability and critical illness cover to qualifying customers – is 75% owned by Absa, one of South Africa’s big four banks.
Last year, Absa bought the controlling stake in Instant Life to gain a scalable platform to grow its Bancassurance business. The move enabled the bank to deliver automated and efficient life insurance.
Instant Life was established in 2008 to address a growing market for pure-risk life insurance sold online. It focusses on a small, but niche market.
Bryan McLachlan, CEO of Instant Life, reveals that the online insurer wanted to roll out its business model carefully before tackling a bigger market.
“We are now in a position where we want to grow aggressively. That’s part of the rationale for us seeking a partner, a big brand and a company with a lot of clients and that’s the rationale for Absa taking a majority stake in Instant Life,” says McLachlan in an exclusive interview with TechFinancials.co.za.
“Going forward, we will be leveraging the Absa brand. We will be leveraging the Absa customer base to grow aggressively and we think we are well-positioned for the next phase of our growth in partnership with Absa. This deal with Absa is subject to regulatory approval”.
Asked whether Instant Life will be piggy backing on Barclays Africa, owners of Absa, to grow its footprint across the African continent, the boss of Instant Life, said: “That’s one of the opportunities we are definitely discussing with Absa, but there is no finalisation at this point”.
McLachlan added: “It is certainly on the radar. We do think that low-cost model and disruptive model is very efficient, convenient and suitable to many markets. But there is no decision yet to go to any other countries.”
Barclays Africa operates in 15 African countries including South Africa, Nigeria, Kenya, Ghana, Tanzania and Mozambique.
It is anyone’s guess if Instant Life will be rebranded into Absa Instant Life or will keep its brand name.
“The (branding) decision is being finalised as we speak. What I can say is definitely we will be leveraging the Absa brand. Exactly, how that plays out is going through the processes with Absa,” says McLachlan.
Furthermore, Instant Life is using digital channels such as the Web and smartphones to make inroads into the insurance market.
Its underwriting engine allows the company to underwrite 99% of life policies electronically within 20 minutes and enable customers to save up to 30% on their premiums.
Instant Life believes its online insurance model is cost-effective and delivers a digital experience to tech savvy customers.
In addition, the Internet of Things, wearable computing, and big data are rapidly changing how insurance products are distributed and priced.
Instant Life is investing in fitness wearables and other technologies. For example, customers that purchase Instant Life’s Fitlife product and wear a Fitbit receive premium discounts in exchange for their health data and for following a healthier lifestyle.
“We are constantly researching and working with partners such as our reinsurers to look at how wearable technologies are used in other parts of the world. And more importantly to see how we can help customers to be healthy and be happy. A life policy is one policy most people don’t want to claim,” says McLachlan.
Instant Life also compliments Absa’s recent launch of the first predictive underwriting solution in Africa, and one of the first globally.
Absa Bank, a division of the Barclays Africa, has piloted a new predictive alert service that not only notifies customers of potential shortfalls in their bank accounts, but which also offers personalised options to make it easier for customers to manage their finances.
By using the latest in big data and open source technologies, Absa’s smart personal alert enables customers to effectively manage their monthly payment obligations and avoid unexpected surprises. To date, it has been piloted to more than 50 000 customers in South Africa
“We are investing a lot of time and effort into analytics. We think analytics are going to play a massive role going forward. In particular, that’s one of the key items we are working with Absa,” McLachlan says.
“They have developed analytics capability. Certainly, we will be using analytics going forward for both markets and underwriting.”
The question is will Instant Life succeed in a market that is over crowded with small and big players such as Old Mutual, Sanlam and Momentum?
McLachlan believes the online insurer is well-positioned in a market that is middle to mid-range income families that have been neglected by traditional insurers.
“We are very focussed on this segment called the missing middle. We think there is significant market in the middle, where customers are not well-services by the traditional channels and advisors,” says McLachlan.
“I think this market is significant and profitable. We do find people that are either technology savvy or alternatively time pressed are finding our services useful.
“We are targeting 300% internal growth for the next year as people find out about us and as we talk to significant customer base at Absa.”