Social mobility can drive business growth – Liberty

A new engine for business growth has emerged in the life industry – social mobility.

This fresh insight on practice development comes from the trend-spotters at Liberty Life.

The wealth company has highlighted a growing mismatch between high levels of socio-economic change and the slow rate at which policy provisions are reviewed and adjusted by the average consumer.

Advisers can perform a socially beneficial service by raising consumer awareness of the need for regular updates of their cover, says Andrew Warren, Divisional Director at Liberty Life.

At the same time, advisers will often see well-motivated opportunities for revising the sums covered and the types of cover that are currently included in a consumer’s portfolio.

“Intermediaries can play a positive role by pointing out the lag between accelerating social mobility and traditionally slow consumer response to lifestyle changes,” adds Warren.

“This is arguably the world’s most dynamic insurance market. But South Africans still dawdle when it comes to updating standard covers.”

In most markets, the key issue is the ageing process. Typically, the under-35s require high life and disability cover. As they age and their family members become less reliant on their earning power, proactive industry professionals will encourage them to adjust these covers and concentrate more on savings, investment products and improved retirement provision.

These factors also apply in South Africa, but are compounded by much greater social mobility. Management fast-tracking and employment equity practices may mean that yesterday’s blue-collar supervisor is today’s middle manager or even a company shareholder.

Significant increases in earning power are generally followed by big lifestyle enhancements in which the entire family share. Children now expect a better education while a spouse grows accustomed to living in a better suburb and everything that goes with it.

“Unfortunately,” says Warren, “the breadwinner will typically make little effort to adjust life, disability and other covers. If some personal tragedy occurs, the sums involved will be totally inadequate.

“We have a situation in which a periodic insurance review is rarely an integral part of a consumer’s forward planning. This means he or she does not adjust policy provisions in line with changes in one’s stage in life. Simultaneously, no account is taken of changes in one’s lifestyle because of rapid promotion or changes of employment.

“As individuals, our customers are socially mobile. As policyholders, they might have stalled five years ago and haven’t moved since.”

Liberty says advisers are ideally placed to address this challenge.

Industry professionals are trained to align financial provision with different stages in life, current needs and family responsibilities. They can achieve better alignment with an individual’s career success while ensuring that covers are complementary and offer optimum value.

Warren adds: “A client is not being properly served by insurance provision if it covers the person he used to be. We can perform a great service by communicating the key message ‘Don’t let your cover stagnate … update!’”