FANews
FANews
RELATED CATEGORIES

Discovery Life sparked the life assurance industry’s regeneration

14 September 2010 Discovery Life
Herschel Mayers, CEO of Discovery Life

Herschel Mayers, CEO of Discovery Life

Consumers have saved over R6 billion thanks to the separation of risk and investment

Nearly 80% of people buy life products to look after their partner and children in the event of death or disability, a survey has found.

The Discovery Life survey also found the key driver that spurs people to change their life insurance provider is money, with 29% of consumers citing this as the reason they would consider switching cover.

84 percent of the consumers surveyed found Discovery Life’s service either excellent or fair, a key driver in client retention. 75 percent of the consumers had not changed their insurance provider in the last five years.

“These results were in line with expectations,” says Herschel Mayers, CEO of Discovery Life. “What we didn’t foresee was the extent of the emphasis that our policyholders place on service. These are valuable learnings for us as we strive to improve our service levels and the customer experience.”

Life assurance industry premiums have reduced by 30% to 40% over the past decade as life assurers have followed Discovery Life’s suit and stripped investment out of risk protection. Estimates indicate life assurance clients have saved around R6.3 billion in the process.

“The introduction of objective medical criteria for disability claims, tiered payouts for different levels of severity of serious illnesses and multiple claims payouts, all pioneered by Discovery Life after our market entry ten years ago, have also created more certainty for consumers and led to a doubling in the number of disability benefit payouts in the industry,” Mayers says.

The risk-only approach is now being replicated in the United Kingdom, where Mayers also holds the position of CEO of PruProtect, Discovery’s risk-protection subsidiary and joint venture with Prudential plc.

As is the case with Discovery Life in South Africa, links to the Vitality wellness programme enables policyholders to control their future premium increases by managing their health. The lifestyle benefits of the Vitality programme also mean that clients who engage with the programme receive tangible value from their life policy on an ongoing basis.

The survey found since the affordability question was also related to clients’ perceptions of the value they receive from their life assurer, “innovative products and excellent service again remain key in perceptions of value amongst consumers of life services in South Africa.” This is particularly critical in a recessionary environment where consumers are more likely to lapse their life cover.

“When we see a client in danger of lapsing a policy we contact the client and look at possible ways we can change the cover if necessary, but emphasise that they should not lapse the policy. In a country where estimates say we are underinsured by as much as R10 trillion, it is incredibly important that clients be supported in maintaining their cover,” Mayers says.

Discovery Life last week reported an improvement in its lapse rates, which have been consistently lower than elsewhere in the industry. Discovery emphasised the link between Vitality engagement and client loyalty, and the buffer it has created to protect Discovery Life from the worst effects of the financial crisis.

“Our strategy of providing value through good service and dynamic products that offer living cover to policyholders, will remain central to Discovery Life’s strategy going forward.

“We intend to keep re-engineering service in the life assurance industry,” Mayers says.

Discovery Life was launched ten years ago today (Tuesday, 14 September 2000). At the time, Discovery Life was the first to introduce the first risk-only life assurance product – with no investment element – in South Africa. Discovery Life today has 550 000 policyholders.

This shift meant insurers were able to offer more cost-efficient cover, with consumers benefiting from lower premiums across the industry. Estimates show consumers have saved over R6 billion as a result.

Quick Polls

QUESTION

The shocking crime and motor vehicle accident statistics shared during a recent SHA presentation suggests that group personal accident and personal accident cover are a no-brainer. Do you agree?

ANSWER

Yes
No
Not sure
fanews magazine
FAnews April 2024 Get the latest issue of FAnews

This month's headlines

FAIS Ombud lashes broker for multiple compliance blunders
TCF… a regulatory misfit initiative?
The impact of NHI on medical malpractice insurance
Fixed versus variable: can you have your cake and eat it too?
The future world of work
Subscribe now