By: MMI Holdings
Hero Life to change the face of insurance in SA
What happens when you put a number crunching CFP® (Certified Financial Planner®), an actuary and an engineer in the same room? They come up with an innovative business solution of course.
Entrepreneurs Jowyk Muller (Actuary, B.Comm Hons), Kosie Jansen van Rensburg (CFP®, B.Comm), and Jacques de Waal BEng (Industrial) joined the world of InsurTech with their startup for young parents, Hero Life.
Says Kosie Jansen van Rensburg, who has worked in a wide range of insurance disciplines such as group, individual life as well as digital life insurance solutions: “Life Insurance is generally seen as one of the most outdated, analogue consumer services out there. There is so much paperwork and comparisons to be done. You’re exhausted before you even start, especially with life insurance when you also need a medical examination most of the time. We wanted to bring it into the 21st century, where time is of the essence and technology enables us to simplify processes.”
Jowyk Muller, who has worked in financial services for eleven years, working for one of SA’s biggest insurance players, MMI Holdings, and gaining experience in health and life insurance, adds that he recently became a dad for the first time. “With a second one on the way, my insurance needs are changing again and I need to update my life cover for my family. Our needs actually change continuously and with the current process, life cover is arduous to get and again arduous to change. I believed we could make it so much easier,” he says.
Muller explains that in the old days communities used to take care of each other when tragedy hit by naturally pooling their resources in one way or another. It is part of human nature to look after each other when bad things happen. He continues: “Life insurance companies formalised this function of pooling resources to help those in need. However, low transparency, conflicts of interest and profit motives have broken our trust in the system. If the purpose and mechanism of insurance is so simple and pure, why is it that life insurance products have become so complex and provide such low value? In South Africa, the archaic back-end and middle man can gobble up anything from R35 to R60 of each R100 paid by clients. This means that typically R50 of each R100 is paid to its intended cause – claims!”
Van Rensburg adds that products are often lifelong, which make them expensive, complex and inflexible to adjust to your needs. “This means we pay too much now for cover we won’t need in the future. We believe that our clients and the virtuous communities they are supposed to create, deserve much better value and more transparency than the current reality. We’re passionate about helping people to become financially savvy. Our aim is to get back to basics and cut back on the fat,” he says.
Prior to starting Hero Life, Jacques de Waal worked in engineering consulting and financial services for five years. He reckons the insurance industry is rampant with opportunities for innovators and disruptors. “The insurance industry has not yet been significantly disrupted by new technology and game-changing business models. The life insurance market in South Africa is currently worth around R600 billion (ASISA Life Insurance Statistics 2017). There is absolutely no reason why we can’t get a piece of that cake. Tech giants such as Apple, AirBnB, Amazon and Uber have set the tone for InsurTech start-ups, with consumers becoming more tech savvy, shifting customer expectations in all industries. InsurTech allows us to get closer to customers so that we can meet their expectations. It offers agility, speed, creativity, digital know-how and insights, so that we can be responsive to what customers really need.”
Conventional insurers have traditionally relied on a vast network of brokers and call centres to sell their products. Says Muller: “We’re not saying brokers and financial advice is bad. In fact, it’s critical that people understand what protection their families need and that they put the right solutions in place. We just believe that most people have quite simple life insurance needs, especially when they are younger. By simplifying the solution and enabling it through technology, we can give our clients a lot more value. When it comes to servicing our market, the traditional channels are very costly and inefficient, and have introduced unnecessary product complexity. The complexity also makes people feel disempowered. We reckon young parents will prefer to sort themselves out using digital tools and support.”
At Hero Life there is no middle man that needs to be paid, which ensures that their model is much more cost effective. Van Rensburg continues: “We offer direct communication channels between ourselves and our clients and can engage with them any time if support is needed. We want to provide simple, quality cover that most people need at a great price due to our efficiencies and business model. More importantly, we want to empower our clients to be in control of the process and their money, so that they can protect their families without it costing a fortune.”
Hero insurance vs Traditional Insurance
Hero Life is starting with simple life insurance for new parents. They offer an upfront fixed term of five years that they will help you extend and expand when you need to at the best price. Online signup and an upfront price create a great user experience with no medicals or paperwork. Expert support is available anywhere in the process and it is simple to adjust your cover amount if you need to. Applicants only need to be between 20 and 40 years of age, have not been declined life insurance, have not been in hospital in the last 5 years for longer than 2 days, and do not need to see a specialist in the next two weeks or take chronic medication.
According to Muller, the beauty of their product is that clients will be able to change their cover themselves as their needs change and only take the cover for as long as they need it. “It’s actually very simple. As time goes by you typically save money, pay off the home loan and your kids are closer to leaving the nest, which means you need less cover. You don’t necessarily need life cover once your kids have left home and your bond has been paid, but with traditional policies you often keep paying. Our technology enabled process makes cover easy to get and easy to change, with you in the driving seat. It’s affordable as there are no costly overheads or penalties, and most importantly, you only pay for the cover you need. The initial contract period is five years to keep the product simple, and we’re working hard at it that people can extend this period at a click of a button for as long as they need to when they feel ready. We’ll use data to negotiate the best deal for our clients, keeping the process seamless. You can also cancel at any time without any penalties. We currently offer one of the best deals in the market, and the simplicity is beautiful!” he says.
Van Rensburg believes becoming a parent is probably one of the greatest experiences in life. “We do everything in our power to create the best future for our kids and want to protect them as much as humanly possible. When you have your first child, your planning and how you think about the future should change. Your kids are your responsibility for at least the next 20 years and you have to protect their education and their futures, no matter what happens. Young parents need cover the most and 75% (TGISA 2014B/2015C/2016A) don’t have any. There is no faster, more flexible and affordable way than Hero Life to sort out their life insurance needs. Parents need to be extremely astute with their money – more so than anyone else!”
De Waal concludes: “We live in a world where you only buy one song on an album, where you watch episodes of a series as and when you want, so why can’t you get life insurance in the same way? Hero Life is a world-first when it comes to our process and design. It’s where young parents can control their money and protect their families. We’re very excited about the future and more firsts from Hero Life.”
Visit www.herolife.co.za for more info.