The ‘ refounding ’ revolution :
ADVICE AND DISTRIBUTION
The ‘ refounding ’ revolution :
Tiny but mighty lessons learnt from microinsurance
Mzwandile Mtshali , PPS Group Executive : Advice and Distribution
The financial services landscape in South Africa is diverse . There are century-old large banks and insurers but also new , fast-growing , digital versions of these . A myriad of services are included – from “ good old ” savings accounts , life insurance and home loans to more innovative products such as mobile money , digital investment platforms , blockchain and cryptocurrency , artificial intelligence-driven financial advice and microinsurance , to name but a few .
Although its name suggests something “ micro ”, in South Africa , microinsurance is a “ mega ” force in terms of size and reach . This sector , serving markets traditionally left out by conventional insurers , offers powerful insights into customer engagement , product simplicity and financial inclusion . For established players , including PPS , the mutuality embedded in microinsurance models holds profound relevance and offers key lessons for improving and refining financial services for higher-income earners .
WHAT IS MICROINSURANCE ?
As a general concept , microinsurance targets the population that cannot afford conventional insurance policies . Some examples of speciality cover include health , life , property and agriculture , which are usually available through affordable instances and packaged products .
One standout example of microinsurance in South Africa is the funeral policy . These policies are integral to South African culture due to the importance placed on burial rites , making them popular across all income levels .
The structure of many microinsurance products also mirrors mutuality principles . As EY points out , many microinsurance schemes operate on a community-based model , where policyholders play an active role in the management of the scheme . These models embody the same principles that PPS embraces in its ethos of mutuality : a shared responsibility for the protection and welfare of the community .
A BIG INDUSTRY
Globally , the microinsurance market is anything but small . In fact , it was valued at around $ 74.2 billion in 2023 , according to a July 2024 report by Global Market Insights . The market is projected to grow at a rate of 6.5 % annually from 2024 to 2032 . In South Africa , funeral cover alone is a multi-billionrand industry . By June 2021 , the value of in-force funeral policies had reached R38 billion , with South African life insurers paying out nearly R40 billion in death and funeral benefits in 2023 .
LESSONS FROM MICROINSURANCE
Building community trust : Microinsurance shows the importance of being part of the community . Funeral homes , for instance , have the lowest lapse rates because they are trusted , local institutions . Insurers that actively engage with communities can build trust , which translates into better customer retention .
Competing with non-traditional players : Microinsurance often competes with non-traditional