Passion for life: a look at the life insurance industry
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Transcript of Passion for life: a look at the life insurance industry
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Risk Summit 2015
Unlocking the opportunities in risk
Mark van Der Watt
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• MMI’s client strategy
• Some distribution trends
• What the UNISA study tells us
• Gaps in the market
• Opportunities for advisers
Agenda
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Factors leading to new strategy
Technology
advances
Fairness
Regulations
Lack of trust
Clients are more…
• Demanding
• Diverse
• Indifferent
• Selfish
• Sophisticated
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The new MMI strategy
OUR PURPOSE
OUR STRATEGIC FOCUS AREAS
Why we existTo enhance the lifetime financial wellness
of people their communities and businesses.
GrowthClient-
centricity Excellence
The way we will compete
OUR VISIONWhere we are headed
To be the preferred lifetime financial wellness partner, with a
reputation for innovation and trustworthiness
OUR VALUES
A culture that is grounded in the values of accountability, excellence,
integrity, diversity, innovation and teamwork
What we stand for
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Momentum’s purpose “To enhance the
lifetime Financial Wellness of people, their
families, communities and businesses”
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• Momentum’s success in the past
– Service excellence
– Distribution excellence
– Product innovation
Role of advice
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• Now – client centricity
• Role of advice
– Critical
– TCF outcome 4 – “suitable advice taking account of client
circumstances”
Role of advice
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Role of advice
Product
Product
Product
Product
Financial
adviceClient
Financial
Wellness
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TRENDS
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NMG study
Class of adviserChange in market share
(2012 to 2013)
Independent financial advisers -13%
Aligned advisers +6%
Tied agents +16%
Bank brokerages -11%
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Swiss Re survey
0
1,500
3,000
4,500
2008
200
9
201
0
201
1
201
2
201
3
200
8
200
9
201
0
201
1
201
2
201
3
200
8
2009
201
0
201
1
201
2
201
3
200
8
200
9
201
0
201
1
201
2
201
3
Brokers Tied agents/own sales-force Banks Direct marketing
Rm
Distribution channel
Excluding new participants and corrections New participants and corrections
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WHAT THE UNISA STUDY TELLS US
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Movement per 1 000 households
DUDrifting Unwell
AUAnchored
Unwell
11
12
122
From DU
To DU
2012 t
o 2
01
3 2
01
1 t
o 2
01
2
11 to AU
1 to DU
2 from AU
14 to DW
2012 t
o 2
013 2
011 t
o 2
012
AWAnchored Well
DWDrifting Well
9
8
46
60
To DW
To DW
2012 t
o 2
013 2
011 t
o 2
012
11 from
AU
1 to DU
14 from
DU
46 to AW
2012 t
o 2
013 2
011 t
o 2
012
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AgendaGAPS IN THE MARKETGAPS IN THE MARKET
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True South (2013)
Death Disability
Number of earners 13.0m 13.0m
Death/ disability events expected per year 130 050 43 065
Death /disability events expected per day 356 118
Source: True South
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• Insurance gap increased from R18,4 trillion in
2010 to R24,0 trillion in 2013
• R9,3 trillion death
• R14,7 trillion disability
True South
Source: True South
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True South survey
2013 Gap (R'trillion)
Death Disability
Insurance need 15,1 24,4
Actual cover -5,9 -7,3
Disability grant -2,4
Insurance gap 9,2 14,7
Gap as % of need 61% 60%
Source: True South
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True South (income groups)
Number of
earners (million)
Average ageAverage gross
income p.a.
(R'000)
20% poorest 2.6 37 9
2nd Quintile 2.6 36 26
3rd Quintile 2.6 37 52
4th Quintile 2.6 38 111
20% richest 2.6 42 401
All 13 38 120
Source: True South
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True South (gap per income group)
Death cover
Average gap
per earner (R'm)
Total gap
(R'bn)Proportion of
income
20% poorest 0.1 131 11
2nd Quintile 0.3 663 12
3rd Quintile 0.5 1 299 10
4th Quintile 0.9 2 287 8
20% richest 1.9 4 899 5
All 0.7 9 279
Source: True South
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True South (gap per income group)
Disability cover
Average gap
per earner
(R'm)
Total gap
(R'bn)Proportion of
income
20% poorest -0.2 -425 -22
2nd Quintile 0.2 409 8
3rd Quintile 0.6 1 497 12
4th Quintile 1.3 3 459 12
20% richest 3.8 9 801 9
All 1.1 14 741
Source: True South
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True South (gap by age)
-200%
-150%
-100%
-50%
0%
50%
100%
<30 30 - 40 40 - 50 50 - 55 55+Death
Disability
Source: True South
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True South (gap by education level)
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
PS or lower Some HS Matric Diploma Degree
Gap as % of cover needed
Death
Disability
Source: True South
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• Basket
– Temporary disability (income until permanent
disability pays)
– Lump sum disability (once-off expenses)
– Permanent disability (income until retirement)
True South survey (disability)
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• Disability gap greater
• 38% of permanent disability need covered
• 7% to 25% of temporary disability need covered
True South survey (disability)
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Benefit mix
2007 2008 2009 2010 2011
Life Cover 60% 58% 59% 60% 61%
Disability Cover 31% 33% 31% 31% 30%
Critical illness Cover 9% 9% 10% 9% 9%
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True South (disability sales)
0%
20%
40%
60%
80%
100%
2007 2008 2009 2010 2011
Income beneift
Lump sum benefits
Source: True South
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True South (income disability)
2007 2008 2009 2010 2011
Permanent cover 99.4% 99.7% 99.5% 99.3% 99.2%
Tempory cover 0.6% 0.3% 0.5% 0.7% 0.8%
Source: True South
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True South (disability sales)
0%
20%
40%
60%
80%
100%
2007 2008 2009 2010 2011
Accelerated cover
Standalone cover
Source: True South
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• Sales skewed to death benefits
– Expect 43% more disability than life cover
• Disability sales skewed to lump sum
• Lump sum disability risky for individuals
– Market risk (need 32% to 41% more)
– Consumer understanding
– Behavioural (sudden access to lump sum)
True South survey (trends)
Source: True South
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• Accelerated disability cover
– Ratio up life cover
– E.g. expose the estate
• Income protection sales skewed to permanent
True South survey (trends)
Source: True South
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Remedies
Death Disability
Purchase additional
insurance Insurance (% of earnings) 2,90% 1,80%
Increase in cover 1,6% 1,5%
Reduce household
expenditureRequired reduction 33% 37%
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WHAT OUR MYRIAD DATA TELLS US
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Benefit mix
29%
21%26%
7%
2% 7%
1%1% 1%
5%
Death only
Death & Disability
Death; Disability & Critical IIlness
Death; Disability Critical Illness; Income Protection
Income Protection Only
Death & Critical Illness
Death & Iincome Protection
Critical Illness only
Disability only
Other
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Myriad (disability)
0%
10%
20%
30%
40%
50%
60%
70%
80%
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Standalone
Accelerated
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Myriad (disability)
0%
20%
40%
60%
80%
100%
120%
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Lump sum
Income
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Myriad (disability)
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Income Protector
Temporary IncomeProtector
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FOR ADVISERS
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RISK VS SAVINGS
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R39 BILLION INANNUAL PREMIUMS
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DISABILITY COVER
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INCOME PROTECTION
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LONGEVITY BENEFITS
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Longevity Protectors take-up
10%
15%
20%
25%
30%
35%
40%
45%
50%
Ju
l-1
2
Aug
-12
Sep
-12
Oct-
12
Nov-1
2
Dec-1
2
Ja
n-1
3
Fe
b-1
3
Ma
r-13
Apr-
13
Ma
y-1
3
Ju
n-1
3
Ju
l-1
3
Aug
-13
Sep
-13
Oct-
13
Nov-1
3
Dec-1
3
Ja
n-1
4
Fe
b-1
4
Ma
r-14
Apr-
14
Ma
y-1
4
Ju
n-1
4
Ju
l-1
4
Aug
-14
Sep
-14
Oct-
14
Nov-1
4
Dec-1
4
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YOUNGER AGES
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BUSINESS ASSURANCE
TWO OUT OF THREE
BUSINESSES
ARE NOT COVERED
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WHAT WE PROVIDE
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FLEXIBLEBEST-OF-BREED
PRODUCT
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EXCELLENCE IN DISTRIBUTION AND SERVICE
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`
MULTIPLY –REWARDS FOR WELLNESS
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FINANCIAL WELLNESS SOLUTIONS
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`EXPERT ADVICEIS CRUCIAL
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Risk Summit 2015
Unlocking the opportunities in risk
Mark van Der Watt