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Bolstering the safety net

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Today, the average South African is experiencing an uncomfortable reduction in disposable income amid a mounting cost of living crisis. Against this backdrop, financial advisers can influence their clients’ lives by extending their expertise – focusing on risk solutions that not only address their clients’ current budget constraints but provide greater financial understanding and long-term stability.

Life insurers, as the “safety net” of the financial services industry, must adapt to meet the shifts in workforce, technology, and societal expectations if they are to remain profitable and relevant. 2024 is an opportunity for life insurers to make the most of market challenges by placing a renewed focus on organisational culture, tech infrastructure, and enhanced products and services to help alleviate clients’ financial strain and mitigate the pressure intermediaries face.

Opportunity in technology

Looking forward, the new year reveals two potential opportunities. One, the importance of personalised advice will remain essential as trust and integrity continue to be the most prized currencies today. In the past, technological advancements sparked concerns about the future relevance of the financial adviser. While technology will play an increasingly powerful role in the sector, the current financial climate is driving more clients to seek out financial advice directly and in person, where previously they may have looked to online information and resources to fulfil this need.

 

Technology has largely strengthened the advisory process and opened the floodgates for a more dexterous adviser – greater efficiencies mean less time and energy on operational aspects and more time on building client relationships. Digital tools have made almost all aspects of the advisory role easier and faster. For instance, with its digital client application, Bidvest Life has been able to shorten the turnaround time for new applications to just four working days. This positively impacts on the overall customer experience.

Income protection advantage

The second opportunity lies in income protection, which continues to unlock value for financial advisers as a means to cater for affordability challenges and superior claims processes for their clients. Product features like shorter waiting periods on income protection policies can make or break the client experience. Income protection is usually sold on either a seven or 30-day waiting period. Introducing a 14-day waiting period, as Bidvest Life did for salaried lives, goes a long way to minimise the financial burden an injury or illness might have should a person be unable to work.

The speed of paying claims is particularly important for income protection. In 2022, the fastest income protection payout by Bidvest Life was 2.25 hours with the average time being less than 17 days. This compares favourably to the several months it can take for lump sum payouts. After all, to be truly customer-centric, life insurance policies – and specifically an income protection policy – must provide quick access to funds when the client needs them most.

In times of heightened financial insecurity, the industry is being compelled to evolve. There is now an increased emphasis on cost-effective products that are, at their core, customer-centric. Investing in principles like relationship building and product enhancement, combined with greater tech integration will accelerate industry progress and yield greater synergies for financial advisers. This, in turn, will contribute to an improved customer experience as we look to build a more financially resilient South African consumer who appreciates the importance of life insurance and sound personalised advice.