For some time now, an increasing number of consumers have turned to banks for funeral insurance, contributing to the surprising resilience of the insurance industry, despite shrinking households' disposable incomes in the past year.
At Standard Bank, we experienced a notable 17% year-on-year increase in new business sales to the end of June 2024.
Furthermore, the premiums that new customers are willing to pay reflect a similar upward trend. Perhaps most encouraging is the lower lapse rate we’ve experienced – with Standard Bank’s sitting 17% below the market average. This positive trajectory likely mirrors the experiences of other banks, as the sector is making significant strides in distributing insurance products. This growth is no accident; it reflects a shift in consumer behaviour, as people turn to their banking partner for more than just banking services.
There are several factors contributing to this shift. While many consumers often see insurance products as a grudge purchase and sometimes complicated, most people have a clear understanding of the role of funeral cover, and most have a long-standing trust relationship with their banks. This works in the sector’s favour as banks are becoming an increasingly convenient distributor of insurance products for their client bases. While branch volumes are changing, many people still actively use their branch, and we all use our banking apps more. So, insurance products offered through these platforms are at their fingertips.
The industry has leveraged this trust and familiarity with funeral cover to upsell and encourage clients to plan financially beyond just funeral expenses by developing enhanced "funeral plus life" products. Funeral distribution data from NMG Consulting shows that half of Standard Bank Insurance clients earning over R25,000 a month now purchase cover that exceeds the cost of a funeral.
Many do this to ensure there’s enough money to support their dependants if something happens to them. About 50% of the extra cover goes towards living expenses, with another 24% typically allocated for education costs. Interestingly, there is a growing trend among more high-income funeral clients insuring the lives of those who rely on them financially, not just immediate family. With extended families depending on them, they’re taking responsibility by securing cover for these situations.
This trend also highlights the evolving role of banks into multifaceted providers of financial services and security.
Product innovation and convenience have made customers view banks in this way. Previously seen as rigid, insurance products are now tailored to fit the personal needs of a diverse customer base. For example, Standard Bank’s "cover extender" feature is a direct response to the needs of customers who have inconsistent incomes. It allows policyholders to keep their insurance active even if they miss a premium. We adjust the cover amount rather than terminating the policy altogether. This helps clients keep their financial plans intact in periods of particular financial strain.
Success in selling insurance depends on building trust and offering simple, valuable, and integrated solutions. Banks that offer seamless banking, insurance, and savings options will benefit most from these trends. The industry is well-positioned to continue evolving, offering customers the security they need in every aspect of life.
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