Reaching the uninsured
Insurance penetration in emerging markets remains low. According to a Swiss Re sigma study, insurance penetration in 21 frontier markets in sub-Saharan Africa, Latin America, the Commonwealth of Independent States and Asia is at a rate of less than 1.5%. This is echoed in the 2016 ClimateWise report, Investing for Resilience, which highlights the emergence of a protection gap as societal exposure to climate risk increases while insurance penetration declines.
Furthermore, as the disposable income of consumers continues to shrink on the back of rising inflation and higher interest rates, insurance is often an early option to trim expenses. Unexpected financial events or problems are usually not budgeted for, forcing reliance on credit to survive or meet monthly financial commitments. Being insured means not having to incur unnecessary debt. This frees up income that can go towards savings and investments, which in turn contributes to sustainable economic growth and a healthier society.
We develop and implement our emerging market strategy through appropriate channels in the business to support growth and diversification. This includes the development of products to reach the emerging market in alignment with the Financial Services Charter (FSC) targets and criteria.
The Financial Sector Code (FSC) commits all participants (including Santam) to actively promote a transformed, vibrant and globally competitive financial sector that reflects the demographics of South Africa. This contributes to the establishment of an equitable society by providing accessible financial services to black people and by directing investment into targeted sectors of the economy.
Business-specific and targeted consumer financial education initiatives
It also includes an emphasis on driving business-specific and targeted consumer financial education initiatives to enable access to financial services. For us, this means the following:
- Transferring knowledge and skills to consumers, future consumers and potential consumers for individual well-being and the public good.
- Developing consumer knowledge and understanding of the financial sector and its products and services. Consumer financial education includes programmes aimed at empowering consumers with knowledge to enable them to make more informed decisions about their finances and lifestyles.
Santam’s consumer financial education initiatives aim to grow the business through diversifying and facilitating access to financial services. We have achieved the following:
- We sold just over 129 000 policies as access products in South Africa in 2016, up from 66 000 in 2015.
- Santam Specialist partnered with The Box Shop, a recently established retail outlet and business incubator situated within the Vilakazi Street precinct of Soweto. A pilot programme included the set-up of a learning hub, providing specialist consumer financial education for entrepreneurs. The focus was on interactive teaching and included concepts such as the basics of financial planning, business budgeting, and the risks faced by entrepreneurs. By the end of 2016, 426 entrepreneurs were trained.
- Our strategic focus on the upskilling and education of small business owners extends into the agricultural market. Our partnership with the African Farmers’ Association of South Africa (AFASA) gives us access to 50 000 emerging farmers. During 2016, we rolled out a training programme for 600 emerging farmers. We collaborated with FarmforAfrica to provide training to 182 emerging farmers across the following six South African regions:
- Elm (Venda region)
- One of the biggest challenges faced by these farmers is a shortage of markets where they can sell their produce. The training exposed the farmers to experiential learning and enhanced farming methods, with the aim of providing education regarding the advance from subsistence farming to commercial farming.
- Vulindlela Underwriting Managers (VUM) was able to access and engage with the South African National Taxi Association (SANTAC) regarding a taxi insurance solution for the more than 7 500 taxi owners in South Africa.
- We joined forces with Sanlam-Santam Direct and distributed 10 000 consumer education pamphlets to attendees of the Twelve Apostles Church in Christ (TACC) at the Botshabelo Stadium in Bloemfontein in May 2016. The objective was to support the relationship between Sanlam Direct-SPF, Sanlam-Santam Direct and Sandameli Investments. Sandameli Investments has partnered with TACC to extend financial services to church members.
- We partnered with ESA learning, a SETA-accredited learning institution, to offer consumer education training to South African National Taxi Council (SANTACO) members in the Western Cape. We successfully trained a total of 336 taxi owners and drivers across a host of regions, i.e. CATA Delft, CODETA Khayelitsha and Greater Cape Town, Mitchells Plain, the Northern region and Worcester. SANTACO Western Cape is the representative body of all taxi owners and employees in the Western Cape region and consists of nine regions, covering the entire area from the West Coast (Vredendal) to Plettenberg Bay. It represents approximately 7 500 registered members (owners of vehicles), 15 000 vehicles and 30 000 employees, which collectively transport over a million people within these regions per day. The taxi industry sector is believed to be the largest employing sector in our province, with more than 80% of our province’s total workforce using taxis as their primary means of transport to and from work.