Bridging the insurance gap


Brent Munnik from Cover magazine sat down with FMI (a division of Bidvest Life Limited) CEO, Brad Toerien, at FMI’s recent Claiming Through Life Stages adviser workshop in Cape Town. Together they explored industry misperceptions, customer end results and pitfalls, the risks people face as a result and how these challenges are being addressed by FMI as an insurance provider.

Q. During the #RealityCheck consumer research study FMI conducted last year, you found that people totally underestimate the risk of a temporary illness or injury, and overestimate the risk of death. What are the issues associated with these misperceptions?

A. One of the biggest contributing factors to the insurance gap in the market is that South Africans don’t truly grasp the risks they face. More than that, they underestimate the value of their future earning potential. Put another way, we overvalue the extent to which a lump sum benefit will cover our financial needs, should something happen to us, and underestimate the value of protecting your income. 

For any individual, over the course of their career, the biggest risk is experiencing a temporary injury or illness that’ll stop them from earning an income for approximately two weeks.1 Overlay this point with the fact that 62% of South Africans would face serious financial consequences2 – such as forfeiting their child’s school fees or their bond repayments – if they were unable to work for even a month or two and the result is terrifying. FMI is intent on correcting the way in which insurance is sold, to protect South Africans against this most common risk, and not only the most dire risks such as permanent disability or death.  

Q. How can these challenges be addressed and what solution does FMI propose?

A. Some of it is around having the product solution in place and that’s an area we’ve worked particularly hard on, since FMI began. We’ve always specialised in income protection benefits, making sure almost any working South African can protect 100% of their income by making our cover available to as many occupations as possible. We’ve also built features into our product to make sure clients can change and increase their cover over time, even if they’ve claimed before. In our adviser workshops, we’ve really focused in on ensuring claim certainty and what that means from our perspective. 

Yet having a good product is not enough when it comes to addressing these issues. It’s about getting into the hearts and minds of our customers. We need to educate and inform clients – especially Earner Earners – to make them more aware of the risks they face and some of the gaps they may have. And that’s where FMI really has a strong purpose – pushing awareness through our marketing efforts and continuing to connect with our advisers on a regular basis. We pride ourselves in supporting our advisers with customer-facing tools that help them to breach this complex process with their clients. 

One of our tools is the Future Income Calculator, which works out the value of your client’s future income (how much income you are still going to earn from now until you decide to retire). Working hand-in-hand with this, is the Risk Reality Calculator we’ve just launched, which allows you to calculate the specific risks an individual faces in their lifetime. This helps advisers and customers understand their risk of a temporary injury or illness, a permanent disability, as well as a critical illness like cancer, as well as their risk of death. Using these two tools together will help us change the conversation and compel customers and advisers alike to think differently about how they prioritise their life insurance and needs. 

Q. And from an adviser perspective… what is the best way to approach the misconception and how does FMI assist?

A. For us, we think it’s about changing the conversation completely from saying ‘we want to protect the stuff you have or the life you have today’ to ‘we want to protect the income you haven’t had a chance to even earn yet’. We have a future-forward perspective – and if you take that point, then this discussion should start with wanting to protect your client’s ability to earn an income (their future income) against the four major risks (temporary injury or illness, permanent disability, critical illness, and death). That’s where FMI’s ‘income-first’ philosophy comes through. If you want to protect your clients against these four major risks, the best way to do it is with a benefit that will replace their monthly income. 

Q. Should the industry as a whole not be more proactive in addressing this issue?

A. Absolutely. As an industry, I think we are improving. But there’s still a significant gap if you consider the market sales of income vs lump sum benefits. There’s still a lot of work to do, but we are starting to see a positive response.

1 FMI claim stats 

2FMI #RealityCheck Survey 2018