Direct and digital
Direct short-term insurance buyers have been hugely receptive to direct players such as Outsurance, Telesure — which owns the Dialdirect, 1st for Women and Budget brands — and MiWay.
Outsurance and Telesure now have similar market shares in personal insurance lines to industry gorilla Santam.
But they are exchanging one high-cost item on their income statements, broker commission, for two others: round-the-clock advertising and a call centre in which many of the staff are graduates and expect to be fairly remunerated.
The new player in the direct industry, Infiniti, has a more economical business model. It does not have a call centre — it offers an online platform — and its advertising is low key, focused on late-night radio and some in-house television at airports.
The style and culture of Infiniti looks quite different from that of the big direct houses.
While Telesure CEO Tom Creamer is a consummate marketer who happens to be selling insurance rather than soap, Infiniti boss Sharon Paterson is a dyed-in-the-wool insurance person who can talk passionately about such arcane topics as Lloyd’s of London syndicates.
Infiniti has entered the direct market 11 years after it was founded to write motor warranty insurance through brokers.
In 2007 it amended its licence to write all classes of business. It wrote R1.4bn of premium income last year, making it a respectable small to midsized player. Much of this was in fields far removed from the cut and thrust of personal motor policies; it was in the more specialised world of underwriting management, where it writes aviation, liability and corporate business. It also writes reinsurance.
Paterson says it made sense not to set up a call centre, though there are four people in the Sandton head office, all with underwriting experience, who can take calls.
But in the few weeks since Infiniti’s direct business went live, just four people have phoned in and a handful have sent e-mails.
“We will speak to clients, but only at their request,” says Paterson.
This contrasts with, say, Dialdirect, which in a trial application by the Financial Mail, bombarded us with phone calls even though they weren’t requested to do so.
If cases are too complex, then Infiniti will refer the case to one of the nearly 40 broker branches that support it. This has no doubt helped Infiniti keep brokers in the fold and stopped them seeing the direct offering as a competitor.
“And once that business has been placed with a broker it won’t necessarily come back to Infiniti,” says Paterson.
Unlike the competitors who by offering personal lines and then offered commercial insurance, Infiniti is accepting calls from commercial clients as well. In fact, Paterson says, the company is reluctant to take too much unsupported personal motor business, preferring to offer a more comprehensive allrisks policy. She says that even this more complex product can take less than 10 minutes to buy, at least according to internal trials.
Paterson says the target market is businessmen who are comfortable managing insurance themselves, rather than the firsttime car buyer.
Commercial clients select whether they are fee-based, retail or manufacturing and then go through a simple, step-bystep process that makes clear what is and isn’t covered. They then go through add-on options such as theft of money, first loss cover and theft by staff.
It simplifies the work for clients as, for example, it does not require windscreen claims to be recorded as part of a claims history. And the policy wording is available to check at every point in the process.
As it has come into the market this late, Infiniti has been able to construct its offering to meet the regulatory requirements of treating customers fairly.
Infiniti is independent of all corporates, even Hollard, which originally set up the business. Its three shareholders are industry veterans Justen Cooper and Marsh Shirtliff and, intriguingly, fund manager Dave Foord, in his personal capacity. Foord has a good eye for winners among listed companies, though this doesn’t always translate into picking niche unlisteds.
Infiniti isn’t correct when it claims to be the first company to offer end-to-end Internet sales of insurance. For example, in 2015 Dialdirect launched a product in which clients buy insurstarted