Are we engaging with change to remain relevant?
There have been many reports in the insurance industry surrounding growth and the fact that if companies are looking for large scale growth, they must expand into emerging markets; both in Africa and locally.
While this is a definite area of expansion for companies, the ease of this growth will largely be determined by the level of engagement companies have with the market.
Different sectors
Brokers and insurers have always had high levels of engagement with the public; this has been a cornerstone of their success in the South African market. But this has been engagement with clients who are educated, have purchasing power, and are part of the formal economy.
However, Dr Melani Prinsloo, Founder of the Information Research and Knowledge Hub, pointed out that what brokers and insurers need to realise when they expand into Africa is that many economies are not structured like ours. A large portion of their economies belongs in the informal sector.
Speaking at a breakfast hosted by the South African Underwriting Managers Association (SAUMA), Prinsloo added that while a number of models inherent in the market are designed for developed markets, they are inappropriate for developing markets. This needs to change if companies want to capitalise on large scale growth.
Changing mindset
The fact that there needs to be greater inclusion of the informal sector into the economy has become a growing reality in the South African society. Prinsloo points out that if we look at the South African picture, the formal sector only holds 10 million people while the informal sector holds 45 million people.
“This leads to uneven development. If we increase the size of the economic pie and we bring more people in, we can move past the mindset that we are the country with the biggest economic inequality in the world. Models have to change to adapt to this school of thought,” said Prinsloo.
Forced change
If companies do not adopt this shift in mindset, Prinsloo pointed out that it might be forced upon them. South Africa has a long history of labour and social unrest, which is mainly rooted in the fact that the poor see what they cannot have and they feel that government should be doing more to force their inclusion into the economy.
If these actions will not force change, then the growing middle class will. Over the years, a growing number of workers – who are highly geared at working towards social change – have entered in the market. This group is very educated and want to be included in society as equals of those who have always been seen as the privileged hierarchy of society.
Simple engagement
Brokers and insurers are not sitting back and waiting for this change to take over the country before they do something. There has been a lot of work by the financial services sector to include these people into the economy. Products are more structured and geared towards lower income earners, and brokers who know how to engage with this market are making the most of the purchasing power it may have.
However, more can be done. “We need to look at the types of questions we ask our audience; because if we ask the wrong question, the whole data set is skewed. We also need to look at the language we speak to our clients. The majority of the nation speaks English at the workplace and a variety of different languages at home. Yet, insurance contracts and policies are worded in either English or Afrikaans. How can we achieve inclusion when this is a reality?” asked Prinsloo.
Tune into their reality
There is no surprise that lower income earners face a different reality to higher income earners; and the financial services industry is fully aware of this. However, Prinsloo points out that there is a difference between knowledge and engagement.
“The majority of lower income earners in South Africa live in informal settlements; research done in these areas show that apart from food, airtime is a major purchase in these areas. Therefore, companies who advertise on these platforms become very visible and relevant,” said Prinsloo.
They also have a different view when it comes to risk. Brokers and insurers should therefore ask these clients what they think risk is and then take a step back. Tailor made products are becoming popular and relevance is a key component of trust. By taking a step back both aspects are being looked at.
Repeat…repeat…repeat
Repetitiveness is a precursor to success. We learn this as kids and we apply these lessons with our own children when we teach them about socially acceptable behaviour. If we apply this to designing messages aimed at the lower income earning sector, then we will get through to them.
“How do we expand our point of view? How do we engage with this reality? We need to break down the barriers of the mind and throw away the traditional way of thinking. We are so used to one view in a developed economy, but multiple views exist in developing countries. We need to embrace this.”
Editor’s Thoughts:
The world is changing. Are we sitting back and waiting for this change to fully take shape, or are we actively participating with this change in order to remain relevant in the market? Please comment below, interact with us on Twitter at @fanews_online or email me your thoughts [email protected].
