Simply Financial Services innovates in group life insurance for SMEs in SA
New life-insurance package is believed to be a first for the South African market
Businesses looking to provide quick and easy life insurance for their employees can now get it online with insurance technology company Simply Financial Services.
The product is a life-insurance combination comprising life, disability and/or funeral benefits – specially designed for small to medium-sized businesses (SMEs) in South Africa. Best of all, you can get it all online in less than 20 minutes.
Called Simply Group Cover, the online combination is believed to be a first for the local market. It provides benefits of up to R2-million cover for life and disability and up to R50,000 family funeral cover (including spouse and up to five children).
Combinations are entirely customisable, so employers can choose the cover they can afford and want to give to their employees.
“Traditionally, group life insurance has been dominated by large insurance companies and sold by brokers. Commission is regulated at relatively low levels and it often doesn't make financial sense for brokers to chase small to medium-sized businesses – especially when taking into account the administrative burden, which includes collecting employee information, adding and removing employees etc,” said Simply Financial Services CEO Anthony Miller.
The SME sector in South Africa is sizeable and growing year on year. According to Stats SA figures, in 2015 the number of SMEs in the formal sector was close to 500,000.
“As a result, there is a long tail of SMEs out there that haven’t been served in the traditional group life space,” Miller added. “This is the market we’re targeting with this product. We believe SMEs provide a great opportunity to do well while doing good.”
Value for employees
“Group cover holds numerous benefits for individuals,” said Miller. “First, since the employer pays the premium, persistency is typically better and dependants are more consistently protected.
“Second, the cost of group cover is often far lower [for equivalent cover] than the individual could get directly. Third, better cover may be provided for people with impaired health. And, finally, waiting periods are often waived or shortened. There’s no doubt that good-value group cover is a net positive investment for a company.”
According to Miller, Simply has used technology to simplify the buying and administration hassle typically associated with group cover.
“SMEs can very easily purchase and administer the policy themselves online – alleviating the back-and-forth that typically happens between brokers and companies,” he added.
Cover can be a multiple of an annual salary or a fixed cover level for both life and disability, and a fixed cover level for a family funeral.
Through a simple online sales process, the SME can upload its employees’ details using a spreadsheet wizard; select any combination of benefits and cover amounts; get a real-time, itemised quote; adjust the cover as required; “check out”; and receive confirmation of cover by email. The process is transparent and takes no more than 20 minutes.
Role for brokers
“Although the product is seen as a direct solution where the SME can sign up directly with us, we’re not trying to cut out brokers – we see them as a key distribution channel,” Miller said.
“In fact, we see the product as opening up the SME market to brokers by simplifying the end-to-end process, enabling them to sell efficiently and thereby making the commission/effort equation work,” he said.
The SMEs can largely self-administer the policies online – adding and removing employees as required, adding benefits etc – while Simply takes care of collecting employee information, such as beneficiaries, at sign-up and down the line as new employees join.
Simply’s mission is to secure the financial futures of millions of people by ensuring they get the best life, disability and funeral insurance they can afford. In a market in which up to R10-billion of premiums is written annually, Miller feels a “huge proportion of people are either not served or poorly served”.
Often businesses assume their employees will take the necessary steps to insure themselves, but in reality many people don’t.
“By covering your employees, you’re not just insuring their financial futures if something happens; you’re covering your business too. In the event of tragedy, businesses often feel morally obliged to support their employees’ families. The financial and emotional strain on the business can be significant,” he said.
Free cover limit
Simply Group Cover provides a guaranteed amount of cover, irrespective of the health status of an SME’s employees. This guaranteed level of cover is called a “free cover limit” (FCL) and its value depends on the SME’s number of employees. Companies with five to 49 employees get R500,000 FCL per employee; companies with 50 to 99 employees get R1-million FCL per employee; and companies with 100 or more employees get R1.5-million FCL.
Employees can be given cover over and above the FCL – up to a maximum of R2-million for life and R2-million disability. However, the employees need to answer three simple medical questions to determine whether the additional cover is full cover or accident-only cover (only for death or disability resulting from an accident). Employees all get full cover up to the FCL.
For companies with 50 or more employees, there is no waiting period on life and funeral cover. Employees will have full cover from day one. Where companies with fewer than 50 employees are moving from another group policy to a Simply policy, the start of the waiting period will be backdated to the date the employee was first covered.
About Simply Financial Services
Simply Financial Services is a registered financial services provider that designs and sells great-value, simple life insurance products in South Africa. The business was founded by three South Africans – technology entrepreneur Anthony Miller and actuaries Simon Nicholson and Shaun Dippnall – and comprises a lean and agile team of 14 based in Cape Town, Johannesburg and Pretoria.
Simply products are made available in three ways:
- directly to individual breadwinners (Family Cover) – online and call centre;
- via domestic employers (Domestic Cover) – online and call centre; and
- via SME employers (Group Cover) – online, call centre and select brokers.
Simply products are underwritten by Old Mutual Alternative Risk Transfer, a member of the Old Mutual Group, and reinsured by the Reinsurance Group of America.
This article was paid for by Simply Financial Services.