KCB, the outfit driven by black professionals towards establishment of a cooperative bank, has also set its eye on a mutual insurance venture in a move that promises to shake up South Africa’s financial services market.
The KCB Life venture is mapped out to start swooping through the funeral insurance market and then expand into pure life insurance and other subsectors of the market.
“We have established a functioning network of more than 200 people in and around the financial cooperative,” KCB’s steering committee member, Moeketsi Nchoba, said in a statement.
“We will be using that growing network to launch the mutual insurance operation, titled KCB Life. Simply put, our members will be our agents of launch and growth.”
Nchoba explains that the main attraction of KCB Life is that it is set to operate on a model where members are essentially ‘owners’ of the insurance scheme. This is allowed by the mutual insurance model which is big across the globe.
“When you’re a member of a mutual insurance operation, you essentially own a portion of the operation based on the collection of your premiums without disturbing the insurance product,” says Nchoba.
“This becomes possible when you remove the corporate monster from the equation and replace it with the member interest.”
Consumers who seek to escape the corporate greed should consider the mutual insurance model, says Nchoba. “KCB Life is set to serve them with a worthy alternative.”
A global feature
The mutual insurance model is a big global feature.
The latest Global Mutual Market Share stated that the mutual and cooperative insurance sector account for 27% of the global insurance market by premiums.
The report further notes that cooperative and mutual insurers have consistently increased their policyholder numbers. The total number of policyholders in this space is currently seating close to 1 billion (990 million). The sector has consistently increased employee numbers to boast an employee base of over 1.13 million people.
The 27% global market share has the following continental representation: North America 37%; Europe 31%, Asia and Oceania 15%, Latin America 12% and Africa 3%.
There is clearly a gap to be filled on the African continent.
“We are setting out to fill this gap starting in South Africa,” says Nchoba. “We see this initiative as part of a broader movement to reclaim Africa’s economic control. We want to own and control as far as possible, a significant portion of the economic value chain.”
KCB Life is going for low to middle income earners first and initially via the funeral insurance market.
“We are going to the funeral insurance market with a totally different fundamental. Our model seeks to transform this market by putting into the mix an investment angle. We do believe that this market is ruled by ridiculously expensive products informed by the predatory instincts of most operators.
“We understand what drives people into expensive funeral covers. They seek comfort. We will bring to the market a product that takes care of the anxiety factor while doing something else, building an investment base. We will be killing two birds with a single stone with a funeral cover product that yields investment benefits.”
Nchoba notes that South Africa has had a fair share of mutual insurance operations.
“In fact most of the major insurance operations of today started out as mutual insurers and were demutualised or privatized if you wish. For KCB this is a continuation of the ground-up black economic empowerment (BEE) path we have chosen,” says Nchoba.
“We have carefully considered the dominant BEE paths carved over the past 24 years or so and concluded that they are grossly inefficient as mainly defined by the top down approach. And so we are carving a new path where we start, operate and own our economic concerns.”