TBWR: Old Mutual Life was granted a life insurance license during the first quarter of 2016 (Q1 2016). With only a couple of months operating, how would you describe the appetite of the market for your life insurance offering?
OM: The market has been very receptive to our entry and expectations have been very high given the pedigree of the Old Mutual brand and our success at life insurance in other African markets. We therefore have to manage these expectations which include the offering of a full suite of risk and savings products. We however have a strategy which we need to focus on and at this moment that means selling group risk products only e.g. Group Life Assurance, Group income Protection, Group Funeral and Group Credit Assurance.
TBWR: How is the uptake for Old Mutual Life Insurance products?
OM: The uptake has been exponential; something which is to be expected with a new business. We are seeing that clients who are usually very price sensitive are willing to give us their business at a slight premium because they believe that even where our terms are identical to those of our competitors, our service and ability to pay claims quickly is unmatched. Our brokers and customers alike have come to appreciate that our rigorous on board processes are necessary for dispute free claims and that this professionalism is a key differentiator between us and our competitors.
TBWR: What is your current market share and how do you see it growing in the future?
OM: We are Botswana’s newest life insurer having sold our first policy a few months ago. We will measure our market share over the next 12 months.
TBWR: What value do you see Old Mutual Life bringing to the group and how much does the business contribute to the holding company currently?
OM: The significance of Old Mutual Life to Old Mutual Botswana is the complementary role that it will play to the offerings that Old Mutual Short Term Insurance (our older and more established sister company), can offer to its corporate clients. Our customers are therefore the biggest winners in that they can enjoy both life and short term products from the same trusted brand. Old Mutual Botswana also has ambitions of being an integrated financial services provider for its customers and the addition of Old Mutual Life is a step closer to realising this goal.
TBWR: The regulator, the Non-bank Financial Institutions Regulatory Authority (NBFIRA) says the life insurance sector is slowly becoming more competitive. How will you position yourself to make your products superior to those of the competition?
OM: It is true that the market has been getting more competitive. Certainly this was the case up to around 2015 when we could see a trend toward a balancing of the market share distribution amongst the life insurance players. This has however started reversing. Our observation is that because competition is currently solely on price, an area where the largest insurers are more likely to survive than new entrants such as ourselves, there is an opportunity to compete on other terms such as superior service and distribution.
TBWR: This past week during the launch of Old Mutual Life, you believed there is a gap in the current life insurance market in Botswana which should be catered for. Where do you see opportunities in the life insurance market?
OM: The most common product in the market is funeral cover whereas there are more longer term, and in our view, better value adding products some of which can assist you whilst you are still alive. At a recent Pensions Conference it was mentioned that out of the active working population only a fraction have pensions. It is also common knowledge that the rural population is underserved by the life insurance industry and that the informal business market is all but forgotten. All of these gaps present opportunities. There are also glaring opportunities arising out of inefficiencies in the current life insurance market due to stakeholder apathy.
TBWR: What do you think will be your competitive edge?
OM: The key to our success will always be our professionalism and superior customer service. Customers will always want value and value is not encapsulated in price alone. Insurers have cried foul over an unfavourable economy which factors into customer’s appetite for insurance products. Moving forward do you see this hindrance/threat to your competence and how would you often respond to that?
We do not believe that the current economic climate is necessarily bad for life insurance given the untapped opportunities highlighted above. The squeeze on traditional business should be the spur that drives the innovation needed to access untapped potential. Botswana is the land of opportunity. We are optimistic about our ability to grow.
TBWR: What potential threats do you see to the life insurance business and the business moving into the future?
OM: My only fear is that in a global world, our failure to innovate, will lead to Batswana buying their life insurance from offshore companies. Technological advancements mean that a Motswana can run an unlicensed and untaxed Bed and Breakfast via AirBnB where payment is to an online PayPal account (and is in hard currency). Currently, one can buy a life insurance policy denominated in a hard currency from a foreign insurer through a local broker. Though these are currently sold to affluent clients, it is not hard to see how someone somewhere in the world can develop products for the lower end of the market and successfully distribute them online to consumers in Botswana.