Indie redesigns life insurance for the digital generation

Peter Castleden, CEO at Indie.

Indie, a Sanlam-backed innovative financial services business, has announced the launch of its first product – simple to use and transparent life insurance designed specifically for young adults.

Aimed at gaining a first-mover advantage among the growing digital generation, Indie is combining industry expertise and technology with the support and backing of Sanlam, to design and build from-the-ground-up financial products and services for this generation of digital natives.

“Many large corporations are struggling to innovate, but they understand that without this ability they risk being disrupted by nimble startups,” explains Peter Castleden, CEO at Indie. To address this issue, he explains that Sanlam chose to fund and support a new, decentralised, external startup, that is able to disrupt the company's own business.

“Indie is the quintessential example of how a large, established entity like Sanlam can foster
entrepreneurship by dedicating resources to innovative businesses, without being weighed down with the slow-turning processes inherent within large corporate culture,” continues Castleden. “Indie is less interested in disruption and more interested in redesigning the way things are done so that real problems can be solved.”

This structure enables Indie to operate 100% independently of Sanlam, while leveraging its vast experience and knowledge in addition to its financial backing and financial sector licences. “Creating and maintaining a startup culture has given us the freedom to innovate through autonomy. This has enabled us to go back to first principles, and redesign the way things are done so that real problems can be solved. In so doing we've built a new business that is nimble, agile and less risk averse, with the ability to develop new products to quickly exploit opportunities and go after new markets,” he elaborates.

However, Castleden stresses that unlike many startups, whose main objective is often to sell within a few years of inception, Indie’s mandate is to future-proof financial services. It is designed for the long-term.

The first product range to launch is life insurance designed by Indie and underwritten by Sanlam. The offering includes income protection, debt protection, life cover, disability income, funeral cover, and dread disease cover, and is bundled with a built-in investment. The design is such that, through gamified “CashDrops”, the cost of life cover is almost cancelled out by the cash perks received by members.

Castleden, who previously headed up Sanlam's Actuarial Product Management, says a growing body of research into the younger generations show that most are already receptive to retirement and savings products. “This is largely attributed to the financial distress experienced by their parents' and grandparents' generations.”

However, he adds that life insurance has proven to be a harder sell. “Young people incorrectly believe that because they don't have dependants and few financial commitments, life insurance is unnecessary. What they often fail to grasp is that their ability to work and accumulate wealth, particularly at a young age, is their greatest asset. We have therefore created a product and messaging that addresses the vital need to protect that asset,” says Castleden. “We believe that correctly protecting your greatest asset is an investment in yourself, and we back that up by making an investment in you when you do get covered.”

In addition to this value proposition, Indie has leveraged technology and industry know-how to strip out product complexity and redesign what has traditionally been an onerous and cumbersome administration process.

“There are massive cost and resource inefficiencies at the policy inception stage,” he continues.

“Rather than perpetuate the industry paradigm, where features and more options are added to
differentiate, Indie has created a technology platform that simplifies both the broker and direct sales channels. This hybrid model demands minimised underwriting requirements and offers a simple product suite to deliver fit-for-purpose life insurance.”

In what is also a departure from established industry practices, Indie is taking a different tack to the narrative. “Industry incumbents still tend to communicate insurance as the responsible thing to do, but we believe inexpensive, easy and effective products are enablers, not just safeguards. By building a product that solves a problem to meet client expectations and protect their basic needs, young adults gain access to the financial security that enables them to get on with life,” adds Castleden.

In addition, Indie has added elements of gamification into the product to increase the appeal of the offering to the target market. “By introducing the Bounty concept, we're giving clients an additional incentive to establish and maintain healthy financial habits.”

Following a quick and easy sign up, either through the innovative broker platform, which will be online soon, or direct via the web or mobile interface, Indie clients get rewarded with Bounty – real money that gets invested on their behalf to generate wealth for them over time. The initial amount is related to their age and premium and is invested in a money market fund by default. This sum can remain invested to benefit from the power of compounding interest, with the option to diversify the allocation of funds, until the client reaches the age of 70. The full Bounty and interest earned is then paid out. A portion can also be drawn every five years with CashDrops, should all premiums be paid during this time.

“We've been able to offer this value-add by using technology to drastically reduce the cost of acquisition and the administration of legacy life insurance. We believe that this is a game-changing value proposition that will gain the traction we want in this market, as clients are literally paid to be insured,” explains Castleden.

Castleden also believes that through their financial savviness, the digital generation will understand the impact that compounding interest can have on investments made early on in life. “The younger a client is, the more they can expect to get back. With a potential Bounty in excess of R100,000, depending on various factors, the long-term financial benefit can be enormous. This will be a powerful driver of adoption for our new offering,” he concludes.