Challenging traditional insurance models
Peter Tshiguvho
The traditional insurance model, with its rigid structures and Eurocentric roots, has often struggled to meet the needs of South Africa’s diverse population, especially in the informal economy.
Many people in our townships and rural areas are excluded from the benefits of insurance and often formal insurance products are inaccessible due to a lack of financial literacy. These communities have developed their own informal systems for dealing with financial risks, such as burial societies and stokvels, which function effectively within their socio-economic contexts.
However, there is a significant gap between these informal mechanisms and the formal insurance sector. This gap presents an opportunity to bridge the divide by creating insurance solutions that resonate with the way these communities operate. Co-creating these solutions with the very people they are designed to serve ensures that they are not only relevant but also sustainable.
Co-creation is at the heart of our approach to financial inclusion at Metropolitan. By engaging directly with community leaders and members, we can design insurance products that meet their specific needs. This is not about imposing a pre-packaged solution but about working together to build something that truly belongs to them. For instance, in discussions with traditional leaders, we explored how existing community structures could be leveraged to create insurance products that are affordable, accessible, and culturally appropriate. Another example is our recent partnership with the Nazareth Baptist (Shembe) Church, a collaboration that introduces, as a start, a customised funeral insurance product, specifically co-created to meet the cultural and religious needs of the church members.
The essence of co-creation is partnership. It’s about recognising that the solutions we seek do not reside solely within the walls of our corporate offices but within the communities themselves. By involving community members and leaders in the design process, we ensure that the products we develop are not only accepted but embraced. This collaborative approach also helps to build trust – a critical component in any financial transaction.
The underlying issue of financial literacy
We hear a lot about financial inclusion, but the truth is financial inclusion cannot be fully realised without addressing the underlying issue of financial literacy. Many individuals, particularly in underserved communities, lack the knowledge and skills needed to make informed financial decisions. This lack of financial literacy is often compounded by the psychology of money – the emotions and behaviours that influence how people view and use their finances.
At Metropolitan, we are committed to not only providing financial products but also to educating our clients on how to manage their money effectively. This education goes beyond simple budgeting tips; it involves a deeper understanding of the psychological factors that drive financial behaviour. For example, we know that a sudden influx of money, such as a payout from a life insurance policy, can be overwhelming for someone who has never managed large sums before. Without the right guidance, this money can quickly be squandered, leaving the individual no better off than before.
Our passion for financial literacy seeks to address these challenges by equipping people with the resources they need to make wise financial decisions. This includes working with a financial advisor who understands the complexities of financial planning. Metropolitan has dedicated financial advisors across communities who can assist with factoring in the key elements of financial literacy. There are also free tools available on Metropolitan’s website such as calculators and practical tips to help with saving responsibly. We focus on helping individuals understand the value of planning for the future and the benefits of insurance as a safety net for their families.
However, for many in underserved communities, the formal insurance sector is viewed with suspicion, often because of past experiences or a lack of understanding of how insurance works. By co-creating solutions and enhancing financial literacy, we can begin to build the trust that is necessary for these communities to fully engage with the financial system.
As we look to the future, our goal is to ensure that every South African, regardless of their economic status, has access to the financial products and education they need to secure their future. This is not just about selling insurance; it’s about empowering communities to take control of their financial destinies.
At Metropolitan, we believe that the power of the collective – working together with communities, leaders, and stakeholders – is the key to unlocking this potential. Together, we can create a future where financial security is not a privilege for the few but a right for all.
