Setting insurance standards for low income earners

The Life Offices' Association (LOA) unveiled the Zimele brand at a function at the MuseuMAfrica, in Johannesburg on Thursday. The brand will allow South Africa's estimated 17.5 million low-income earners to easily identify insurance products that meet

The Zimele brand will be displayed alongside the product provider's logo- and the LOA will market it to ensure it becomes a recognised stamp of approval for the insurance industry. Zimele is a Zulu word meaning "to stand on your own two feet" or "assuring the pride of self-reliance."

Product penetration to increase by 80% by 2014

One of the main aims of the FSC was to extend the reach of insurance products to South African citizens in the LSM1-5 category. A stated goal of the industry is to increase the reach of the product by some 1.7 million additional policies by 2014. This represents an 80% improvement on the 2.1 million individuals who currently hold some form of life insurance policy.

The first products to carry the Zimele brand will be funeral policies. There are three basic policies available- offering individual, family and parent cover. The policies have to adhere to strict standards including:

*A six month wait for natural deaths (12 months for parents)
*An increasing grace period (1 month in the first year, increasing by 1 month for every year the policy is held, to a maximum of 6 months)
*Maximum ages of 65 for family cover, and 75 for parent cover
*Minimum cover of R5 000 family, R1 000 parent
*Maximum cover of R20 000

Standards for life cover, disability cover, mortgage cover and credit life cover have been agreed, but premiums have yet to be finalised.

A unique 'maximum premium' product

After lengthy discussion with the competition authorities it was agreed that the Zimele standard would work to a maximum premium. This means that providers of Zimele approved product are free to undercut the approved maximum.

As an example, R5 000 family cover can be bought to a maximum age of 55 years for a premium of R40 per month. The same value of parent cover, to a maximum of 75 years carries a premium of R45 per month.

An insurance company offering a Zimele approved product will be able to achieve as many as 14 points toward their Financial Sector Charter scores.

At least 14 companies already on board

No fewer than 14 companies already offer, or have indicated they will offer a Zimele approved insurance product. The first product offerings are already available to the public.