SA’s lower income groups face greatest risk to health and income, making affordable insurance a vital risk mitigation tool.

There are an estimated 20 disabling motor vehicle accidents daily on South Africa’s roads according to the Road Traffic Management Corporation. South Africans are also 40 times more likely to suffer a temporary disability than a permanent disability according to KPMG. For anyone who commutes on South Africa’s roads whether by vehicle, bicycle or foot, and particularly the 40% who use public transport, the risk of experiencing a disabling accident is certainly not far-fetched.

While vehicle accidents are a leading cause of temporary disability especially in people under the age of 30, most are stunned to learn that serious illnesses such as heart disease, stroke, cancer and diabetes cause the majority of permanent disabilities that prevent a person from working again and earning an income. These conditions are highly prevalent in South Africa’s population; the financial impact of which is particularly hard felt in lower income populations. Furthermore, only a small proportion of SA’s population of 52 million can afford private medical aid – just 8.3 million (16%) beneficiaries are covered under private healthcare. The majority of SA’s population only have access to public healthcare, which in many instances fails to provide even the most basic services.

‘Low-income households and families are hardest hit by risks such as disability and critical illness. While their need for insurance is essential in protecting against the financial ramifications of such an insurable event, it’s still largely out of reach due to the cost. It’s one of the reasons why simple insurance solutions distributed via bancassurance are growing rapidly despite being a relatively new player in the insurance space. For many consumers, this is their very first step onto the insurance ladder. Bancassurance is an easily accessed and trusted distribution channel, the products are simple to understand and in most instances require no costly underwriting,” explains Albert Theyse, Head of Sales at O’Keeffe & Swartz.

From O’Keeffe & Swartz’s sales statistics, the most widely taken up insurance products taken up through bancassurance are funeral policies, debt protection plans, hospital plans and personal accident and disability benefits. There is clearly a growing demand for healthcare benefits.

Historcially, access to healthcare and income protection insurance products in South Africa has been deeply inequitable. Costs of underwritten insurance products mean that they remain largely out of reach for the mid-and low income markets while medical aid premiums increase much faster than inflation. For lower income groups, dealing with the financial implications of a health crisis often means large out-of-pocket costs for transport, loss of earnings and recovery. These are key reasons why the continued innovation in the development of simple insurance solutions and distribution channels must be driven if South Africa is to achieve a financially inclusive society.

“Another challenge that needs addressing is distribution and provision of product information to consumers. When it comes to taking bancassurance products to market and educating consumers, telesales stands out as the number one distribution channel employed by banks. The 2014 Reinsurance Group of America (RGA) SA Bancassurance survey shows that call centres are one of the key channels for bancassurance distribution, with the majority of banks relying on outsourced call centres to handle their insurance telesales. The reason for this is clear - with 59 million registered mobile phones out of a population of 52 million, telemarketing’s pivotal role in the growth of the insurance sector in South Africa comes as no surprise. It remains a highly effective direct sales channel that provides consumers with simple information and access to financial services products that were previously unavailable or difficult to obtain,” adds Albert.

“By using telesales to leverage the existing client relationship of trust and familiarity with their banks, consumers now have access to affordable insurance products that protect them financial distress as a result of an uninsured risk event. Simple, low premium bancassurance products that are readily accessible is a crucial means of achieving financial inclusivity for all South Africans,” concludes Albert.