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Financial advisers who ignore direct life insurers may be missing a few tricks

20 July 2020 Gareth Stokes
Kobus Wentzel

Kobus Wentzel

Insurance brands that were traditionally thought of as direct businesses are among the best-positioned to take advantage of the ongoing acceleration into the fourth industrial revolution (4IR). The possibility that these brands are better at the digital distribution of financial product to customers should not come as a surprise, as they have been fine-tuning their processes and systems for that purpose over many years. One of the legacies of the direct versus middleman warfare that spanned the late 1990s and early 2000s is that financial advisers and insurance brokers dismiss anything with “direct” in the title. We would suggest it is long overdue for all of us to discard this outdated thinking and assess each product provider on its merits.

Busting beliefs and predispositions

It is fascinating how our beliefs and predispositions influence our world view. Two thoughts sprang to mind when we were invited to the 2020 1Life Insurance Distribution Conference. The first was that they were a funeral insurance shop; and the second was that they conducted most of their business in the direct-to-consumer market and were therefore irrelevant to our readership. Yes, they write a lot of funeral business and they are predominantly direct; but they have some innovative platform and product solutions that will assist independent financial advisers (IFAs) with growing their businesses in these tough economic times. 

“We are hoping to assist financial advisers to make sense of the current economic environment and give a clearer view of where the greatest opportunities are,” said Kobus Wentzel, Executive Head of Sales and Distribution at 1Life Insurance. He opened a conference that was anchored by an economic overview, delivered at breakneck speed by radio personality Bruce Whitfield, and themed around identifying and exploiting opportunities that exhibit during crisis. The challenge to IFAs was nicely couched in a motivational quote shared by Whitfield, which read: “To all you Optimists, Pessimists, and Realists out there. While you were debating whether the cup was half full or half empty, I drank it. Love from The Opportunist”. 

The reason many still think of 1Life as a direct business is that it started out as 1Life Direct back in 2006. It initially offered life insurance, adding cover for dread disease and funeral benefits over the next few years. By 2012, in recognition of the growing number of requests from clients who preferred dealing with their advisers face-to-face, the company rebranded as 1Life Insurance. “Our 1Life distribution channel, launched in 2013 with a life and funeral focus, brought us into the multi-channel distribution world,” said Wentzel.

Digital platforms are ‘the bomb’

An investment range was introduced in 2014 through 1Life Invest and subsequently expanded in partnership with Wealthport, a linked investment services and investment distribution business, also backed by Telesure Insurance Holdings. Towards the end of 2019 it was clear that digital platforms were a ‘ticket to play’ in the financial product distribution world. “Late last year, we launched a digital platform targeted at life and investment IFAs,” said Wentzel. He added that this platform represented the insurer’s adaptation to the continued evolution of financial services to accommodate 4IR. The digital platform is capable of 96% straight-through processing with the financial advice process and product distribution taking place entirely digitally. 

The platform and its associated functionality make it possible to conduct a real time financial needs analysis based on five questions, with recommendations on further financial advice requirements and a suggested portfolio. Underwriting is by way of a set of six (minimum) to 12 (maximum) medical questions. According to Wentzel: An IFA can conclude the entire financial planning process in just 35 minutes and deliver a solution, with a built in record advice that captures both the advice process and outcome alongside the policy wording. This level of advice acceleration might not be suitable for every client; but that is something that each IFA would have to assess in line with his or her business practices. 

A whirlwind wrap of SA Inc 2020

Whitfield spiced up the distribution conference with a whirlwind wrap of the current economic outlook. We have a massive debt problem, he said, but there are many things to be thankful for. These include that we have a Ramaphosa rather than Zuma presidency; that the NPA is showing signs of life; that SARS has new leadership; and that something, albeit hard to spot, is happening at Eskom. “You feel that businesses and institutions like Eskom, the NPA, and SARS are in safer hands [than previously],” said Whitfield. His message to IFAs was that indecision was more dangerous than taking well-thought decisions and encouraged all attendees to refrain from sitting on the side lines and rather become actively involved in building the future they want for South Africa. 

What happens next? It is clear that Insurtech and fintech are here to stay. It is equally clear that the trends to ‘work from home’ and digital everything will gain momentum as we navigate the first and second waves of pandemic. This means that digital solutions will become indispensable for businesses that used to rely on face-to-face and real world interactions with their clients. “We are excited about the future,” concluded Wentzel. “We have worked hard to bring new products and opportunities and a new way of doing business to our partner IFAs”. 

Writer’s thoughts:
The extent to which our experience influences our current world view cannot be denied. This article presented me with an opportunity to reflect on how I perceive so-called direct brands, having spent more than a decade writing for pro-intermediary magazines and four years as head of communications for an intermediary association. Do you agree that the direct versus middleman ‘war’ of a decade ago has affected your ability to impartially judge product providers today? Please comment below, interact with us on Twitter at @fanews_online or email me us your thoughts [email protected].


Added by Donovan Brown, 20 Jul 2020
There is a lot of common ground which can be used for direct and intermediary to move closer to each other .
In the short term space Outsurance bloodied many noses by paying BI cover while the other big boys are running for cover to avoid Covid-19 claims !
Huge lessons to the market !!
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