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Ease and accessibility are key to reducing the risk protection gap

21 January 2025 Gloria Tapon Njamo, CEO of Santam Partner Solutions
Gloria Tapon-Njamo

Gloria Tapon-Njamo

Practical embedding of insurance products into existing personal and entrepreneurial networks critical to insuring communities.

South Africa has a notable and rising gap in short-term risk protection – particularly for natural disasters. Natural catastrophe losses such as the 2022 KwaZulu-Natal floods reveal a significant shortfall in insurance coverage. The Santam Insurance Barometer Report 2022/23 reported total economic damage for the floods amounted to R54 billion, with only half of this amount covered by insurance. Unfortunately, those who tend to be the most impacted by this lack of cover are the most vulnerable in our society.

During the 2024 Medium-Term Budget Policy Statement (MTBPS), government placed further spotlight on the issue by raising concerns about the cost and increasing severity of climate-related disasters and encouraging efforts to reduce the fiscal impact on society.

Unfortunately, high living costs and economic malaise leave many South Africans under- or uninsured. Close to three quarters of the South African population lack short-term insurance and government is calling on collaborative efforts like public-private partnerships to improve access and affordability of insurance, especially in vulnerable regions.

Reaching underserved communities is about building trust and understanding. When it comes to short-term insurance as it relates to assets, most people don’t really understand the risk it covers.

Building trust through partnership
South Africans favour a communal way of living. Many communities rely on stokvels and similar collective societies to fulfil the role of insurance and savings, but these arrangements are not without risk. Often, they are vulnerable to instances where an entrusted individual may misappropriate the funds or disappear altogether.

The insurance industry has a role to play in actively working to bridge the risk protection gap in previously uninsured markets by implementing innovative strategies that focus on accessibility, building trust, and providing education. By partnering with well-established retail and telco brands, Santam aims to assist these communities by making insurance solutions accessible.

The high frequency of online fraud and scams intensify mistrust in many communities. This is why distributing applicable insurance products by partnering with trusted retail and telco brands is key to reach broader communities, as these brands usually have some form of distribution centres in the form of their stores footprint. PwC’s analysis of South Africa’s banking sector reveals a dense network of physical branches compared to other African countries especially in urban and rural areas where there is a persistent trust in physical locations.

With the intersection of effective partnerships and digital accessibility, insurance products can be embedded within everyday consumer transactions. For instance, when consumers buy items like TVs or phones, Santam’s insurance is offered as an easy add-on warranty, blending seamlessly with products people value and use regularly. They make affordable insurance available in familiar, trusted settings.

By integrating insurance into the customer journey, we help consumers understand how coverage applies to essential assets like phones, household goods, or small business stock, rather than focusing solely on larger items like cars or homes, which low-income individuals may not always afford to insure.

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South Africa went to Davos to pitch itself as an investor-friendly destination, then signed an Expropriation Act. What message does this send to global investors?

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Invest at your peril
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