Nine out of every 10 insured consumers claim less than they will ever pay in short-term insurance premiums.  It means that up to 90% of the insured pool (and non-claimants) subsidise 10% of multi-claimants. Non-claimants do not receive any return on investment since their hard-earned cash goes to subsidise multi-claimants and insurer profits.  Most consumers acknowledge that being insured appropriately for a catastrophic event remains more crucial than ever, but for the vast majority who never or seldom claim, it remains a grudge purchase that could be delivering better returns with a new and innovative financial model. 

It’s this reality in a tough and constrained South African economy that consumers readily identify with and one that new fintech start-up, Solvency aims to challenge. Solvency provides a seamless way for the insured to use their insurance premiums to create an investment.

Solvency upends the traditional and outdated short-term insurance model by linking a client’s insurance premiums to a savings account, in their name, and allows complete control of what percentage of premium goes to risk and what goes into direct savings, with interest earned.  Solvency is underwritten by GENRIC Insurance Company Limited. As the underwriter, GENRIC guarantees that all valid claims will be paid. Cornel Schoeman, Chief Commercial Officer of GENRIC Insurance Company adds: “GENRIC is focused on taking niche insurance solutions to market by partnering with specialist underwriting management agencies (UMAs), brokers and Fintechs.  Key to these partnerships is our support and encouragement of entrepreneurial skills, customer centricity, and specialist knowledge that is typical of small-yet-highly-focused businesses. We recognise the essential and much-needed synergy between entrepreneurial outfits and established companies, to create new insurance solutions and business models. We believe that the insurance sector in South Africa, can be a major driver of transformation and an incubator of Fintechs that challenge the status quo, thus building sustainable businesses, communities and the economy,” says Cornel.

Muṱoḓa Mahamba, co-founder and Chief Executive Officer of Solvency, has 12 years actuarial experience in short-term insurance. His corporate career culminated as the Head of Product: Africa at Momentum Metropolitan Holdings, where he led product development across eight countries in sub-Saharan Africa. Muṱoḓa founded Solvency with the simple and core purpose of giving consumers greater control over their money spent on insurance. 

“Basically, Solvency replicates the medical savings concept, with some key enhancements.  The client decides what percentage - up to a maximum of 25% - of their insurance premiums goes to savings based on what excess they are prepared and able to pay, should they ever need to claim.  This provides a savings solution that the client can use to partially or wholly fund their excess should they ever need to claim.  If they don’t claim, they can choose to withdraw up to 50% of their savings in a 12-month period in cash for their own use, or better still, leave the money invested to grow and earn interest. The savings belong 100% to the client and not the insurer,” explains Muṱoḓa.

Solvency is premised on three key components:

• Automatic Savings that earn interest:  5% of the premium goes into the client’s savings by default, with the option to increase this up to 25% of the premium.  As the savings amount increases, the excess increases in the event of a claim. If you consider that actuarial statistics show that the average insured person only claims once every four years, for an average amount of R18 000, the benefit of Solvency’s model for consumers is loud and clear.  On an average insurance premium of R1000 per month without taking escalations into consideration, the insured would have paid almost R50 000 in premiums alone.  If they don’t claim during this time, they will have paid R50 000 for no-return whatsoever.  If they claimed for an average of R18 000, they would still have paid R32 000 that provides no dividends whatsoever. 
• BetterDrive Savings Booster - is a driver-behaviour feature, which allows the driver/s to self-manage their premium and cash-back rewards through responsible driving.  The driver can receive up to 25% of cash back spent on premiums every three months, which is paid into their Insurance Savings Account.
• Pay as you Insure - With Pay As You Insure (PAYI), the consumer pays insurance premiums for the insured items for which they need cover for in that month. The premium for items for which cover has been switched off is allocated to savings. 

“The importance of having comprehensive insurance, especially for catastrophic events like a home fire, or a car being written off is crucial.  In being responsible about properly insuring their assets, Solvency delivers an innovative yet simple financial model that makes the insured’s money spent on premiums work much harder for their direct benefit,” concludes Muṱoḓa.

For more information go to www.solvency.co.za – for digital self-service, flexibility to switch cover on-and-off and transparency to track savings.