'Mzansi-Type' Short-Term Insurance Products

Mzansi-type products are the industry’s initiative to make short-term insurance accessible to the previously uninsured market, specifically black consumers in the grouping of Living Standard Measure (LSM) 1-5.

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The short-term insurance sub-sector has been given a target of having 262 500 active Mzansi-type policies by end-2008. According to the Financial Sector Council Board’s 2007 Annual Report, short-term insurers have managed to achieve 1% of the 6% target by the end of 2008. The main reason for this poor performance relative to other sub-sectors is that short-term insurance products are not yet understood in these LSMs, hence SAIA’s drive on consumer education. However, the challenge is also enhanced by the fact that the people in this category have limited financial resources, and research has proven that short-term insurance is very low, if not the lowest, on their priority list. Therefore, the products have to be actively sold, as opposed to be bought. The preferred selling process requires personal contact in order to overcome the element of mistrust. This then leads to an expensive distribution channel for a product that has to be inexpensive in order to be affordable.

It is for these reasons that SAIA has started engaging the Charter Council to open discussions on relaxing the restriction of these products to LSM 1-5. In addition, discussions with the Financial Services Board on lessening the Fit and Proper requirements in terms of the Financial Advisory and Intermediary Services Act (FAIS) for representatives and key individuals selling this class of insurance are at an advanced stage.

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The South African Insurance Association
Association Incorporated under Section 21
Registration No.1998/25543/08

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PO Box 30619
Braamfontein
2017

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27 Owl Street
Milpark

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Email: info@saia.co.za

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‘Mzansi’ Short-Term Insurance Products

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