Investec bolsters its product arsenal with life insurance
Banking group Investec offering is aimed exclusively at its private banking customers
As insurer Discovery gears up to launch its retail bank in 2018, banking group Investec has added a comprehensive life insurance offering to its product arsenal, aimed exclusively at its private banking customers.
Investec Life, which had been under development since October 2016, was not a response to Discovery Bank, Deon Katz, head of Investec Private Bank SA, said on Thursday.
Investec was continually seeking to meet client needs and improve on its online banking and investment platform, One Place, Katz said. The launch of Investec Life, a digital proposition with "high-touch service", was a natural evolution.
Banks and insurance firms are increasingly encroaching on one another’s territory.
As Discovery is set to unveil its bank before June 2018, FNB and Standard Bank are driving the sale of insurance and investment products among banking clients. MMI, meanwhile, is following rivals Old Mutual and Sanlam in extending personal loans, in this case through a partnership with African Bank.
While Discovery Bank will go after the broader retail affluent market, rather than Investec’s high net worth individual niche, Investec clients who are Discovery policyholders through, for example, membership of its medical scheme, will be natural targets.
But Ursula Nobrega, Investec’s head of investor relations, said internal data analytics showed that a small portion of Investec’s 80,000-odd domestic private banking clients were in fact Discovery policyholders.
Fortunately for Investec, some of its clients are professionals who would have medical aid through the Chartered Accountants Medical Aid Fund or Profmed.
"We’re not here to disrupt the entire market," said Investec Life CEO Michael Goemans.
Investec Life would not be a considerable money-spinner for the group in the short term, said Richard Wainwright, CEO of Investec Bank SA. "It is about adding value to clients. It could add [profit] in future."
Investec Life, which has a separate balance sheet to the bank, will offer mortgage protection, life insurance, disability cover, income protection and critical illness cover.
Mortgage-protection cover was the "flagship" of the new product range, as Investec wrote R15bn in residential mortgages in 2017, Katz said.
Automatic monthly adjustments to the premiums on the product, in line with the declining outstanding balance on a customer’s home loan, could save clients 20%-35% in premiums, Goemans said.
Traditional credit life insurance was priced on a "whole-of-life" basis, which led to customers paying for cover that they did not need, said Sinenhlanhla Nzama, head product actuary at Investec Life.
Nzama said other unique product features included a R100,000 lump-sum payment under its life insurance product, and up to R300,000 over three months, on the death of the policyholder, while the claim was being assessed. Its severe illness product covered more than 300 conditions, including stage 0 cancer, and the list would continually be updated, Nzama said.
While the application process for policies could be done online, clients could also receive advice from salaried financial planning professionals who would not be incentivised on commission, Goemans said. Clients would be risk-profiled using "accelerated underwriting" algorithms, so that medical testing would not be necessary for low-risk individuals.
Wainwright declined to comment on how much Investec had spent setting up Investec Life, saying it was immaterial.