Business Reporter
Insurance firms should continuously innovate especially in a market where customers are demanding access to related products under one roof, a financial expert has said. NMBZ Holdings divisional executive for Advisory services Mr Loyd Kazunga said customers are now looking for convenience when seeking insurance products.
In this regard he said that insurance firms should consider product bundling where insurance products are sold together with other related products.
“For instance someone intending to buy a car would want to access a loan to buy the car, insurance for the car and to process registration for the car under one roof without having to move from one office to the other,” he said.
Mr Kazunga, who was presenting a paper on the impact of financial conglomeratisation on the insurance industry, said product bundling can be achieved through mergers, establishment of strategic alliances with banks, investment houses, telecommunication companies and retail outlets.
Other options he said include recapitalisation beyond regulatory capitalisation thresholds and focusing on strategic areas of competitive advantage. He added that an example of a successful partnership was Ecolife that came about due to the partnership between Econet and FML.
He added that there was also need to switch to digitalisation and the simplification of the process of acquiring insurance products, which he said was still cumbersome.
“The era of brick and mortar is slowly coming to an end because people are now transacting online and via their mobile phones why can’t you then design products that allow clients to buy insurance products at the click of a button,” he said.
Mr Josphat Kakwere of the Insurance and Pension Commission, however, said that financial conglomeratisation in the insurance sector was difficult to achieve as insurance firms were not keen to partner or merge.
He said the problem was largely with the owners who were keen on maintaining control of their companies.
“We have owners that are more obsessed with maintaining control of their companies at the expense of their growth and survival.
“They run these companies like tuckshops and in most cases if the owner dies the company dies with them,” he said.
Meanwhile, Mr Moses Mujati an actuary at Moonlight Funeral Assurance who addressed the issue of actuarial entrepreneurship-getting the best from your actuary said that insurance firms should ensure that their innovation appeals to a wider market.
“To what extent is what we are doing appealing to the unbanked market, the informal sector. If we are not focusing on that segment then we are not being progressive. Why can’t we for instance come up with a product that cost a dollar a day,” he said.
To this end he said it was critical for companies to consider actuarial contribution in the development of new products.