Innovative insurance

We live in interesting times where innovation is the name of the game. South Africa is unique in many ways, but similar to, and even ahead of, other countries in many respects. More outside-the-box insurance products will benefit us all.

In South Africa we have a few innovative products in the insurance industry. One such product is the Pay As You Drive motor insurance from Hollard where consumers are charged for motor insurance based on how often they use their vehicle. This was seen as one of the first really innovative ways of insuring you vehicle in South Africa.

Pay when you need it

Taking the concept a step further, motor vehicle owners in Texas in the United States will soon see the launch of an innovative insurance product South Africans could also benefit from; "auto insurance by the mile" or in our case " insurance by the kilometer".

Like Hollard's offering, MileMeter (a Dallas based insurer) will use consumers' usage levels to determine how much they pay. Unlike Hollard's Pay As You Drive, however, MileMeter will not use any kind of vehicle tracking device to record that usage. Rather, consumers will buy coverage in advance in increments of as few as 1 000 miles. When their odometer reaches the end of that increment, the cover expires. So it's really up to the insured to make sure he or she is covered. The rating is based simply on the geographical area and the age of the driver. Multiple drivers in a household can also be covered for a single vehicle.

Pay when you can

Another innovative product is the pay-whenyou-can insurance policy from Old Mutual which provides accident and funeral cover for the whole family at an affordable rate. Metropolitan's Cover2Go accident cover is another example. It is affordable and easily purchased via SMS.

Many opportunities

Here are some thoughts about the many instances where innovative insurance can make a real difference:

* Every short-term insurer does an inventory of the clients' assets prior to insuring them. We'll see a lot less unhappy clients.
* Insurance by the kilometer will result in more insured vehicles on the road.
* Insurers partly subsidise installing microchips in valuable possessions to bring down the replacement costs of valuables.
* Identity fraud coverage would allow at least some people to get their hard-earned money back.
* Long-term Care insurance for people in frail care or an old age home will create happier old people, who will recommend insurance to their children and grandchildren.
* The removal or rewording of burglar alarm warranties will result in fewer cases at the Ombud.
* Luggage insurance that can be purchased at check-in or online through an airline and pays out immediately when you discover your bags did not make it to your destination or that your valuables are not in your bags anymore. This will ensure better airport security and prevents luggage theft and valuables being stolen from luggage.
* Life insurance could be less complicated and more focused on simplicity. More people will buy life insurance.

Outside the box

We have the knowledge and the skills in this country to come up with more innovative insurance products.

We also have a hugely untapped market that can benefit from lateral thinking. If we have more outside-the-box insurance products, won't that make life a lot easier?