Tom Creamer, Telesure's MD for short-term insurance businesses says that the group, more than any of its competitors, has a multichannel approach, through direct sales (Dial Direct), brokers (Auto & General), aggregator (hippo.co.za) and affinity (AA, Woolworths Financial Services and Clicks).
Creamer says the short-term insurance industry needs to let go of the notion that different channels and media operate discretely from one another. Or that personal advice and an Internet-based solution belong to independent and competing channels.
Tom Creamer
"The notion that a single organisation can operate multiple channels to gain appropriate access to the customer is fast gaining acceptance around the world. In SA, though, most organisations are either purely broker-based or purely direct. But this is a suboptimal strategy," he says.
In 2007 in the UK, the insurance market share was split by 18% partnerships and affinities; 44% direct; 3% banks and building societies; 30% brokers and intermediaries; and 5% other.
This is a change from 1999 when the split was as follows: 1% partnerships and affinities; 34% direct; 57% brokers and intermediaries; and 8% other.
What's more, nowadays, 26% of the UK market gets insurance directly from the Internet, 22% get insurance via the telephone and 7% need face-to-face advice.
Creamer says that in SA, Telesure has proved that this approach can be adopted successfully. Direct sales are well established with a 35% personal lines share, but affinity is tiny at 2%, and Telesure can't afford not to service the broker market, as it is still responsible for 63% of sales.
Unlike many other insurers, both life and short-term, Telesure has handled the potential channel conflicts well. In its broker road shows, Telesure is quite open about its conflicting businesses. But it believes that the market is big enough for all channels to prosper.
Auto & General has 2 300 brokers, though 80% of its sales are generated by 20% of these.
Tersia Bester
Tersia Bester, head of Auto & General's broker channel, says that the broker channel still represents a significant part of Telesure's short-term insurance business. "There will always be a portion of the market that values the personal service of brokers," says Bester.
The direct insurance channel's key success factors are low costs, high retention, speedy service and the effective use of technology. When the direct insurance channel was launched, out went "the middleman" and broker commission structures and in came speed, convenience and good value.
In terms of direct sales transactions that take place via telephone, SMS and e-mail, Telesure services more than 100 000 consumers per month.
On the Internet, Telesure has achieved enormous sales success and has been dominant with its advertising in this medium. The Internet is an underused channel in SA and as a medium of transacting it is highly underrated. There are about 4,6m Internet users, and this figure is forecast to grow to 5,5m by 2010.
Telesure has built a very strong online functionality and at the moment, clients are able to get online quotations and can submit and track their claims online.
Affinity is selling through partners, who become the face of the brand. Affinity Insurance is viewed as a high-growth area within the SA insurance market.
Companies with a strong brand presence are able to leverage the trust in their brand to cross-sell financial services. Customers have a relationship with, and a greater degree of trust in the affinity brand rather than the traditional insurance brands.
Distribution to affinity groups is effective and efficient, since distributors use existing infrastructure and enjoy an established relationship and brand recognition among this captive audience.
To add an insurance element to the core service or product offering is relatively simple. Consumers favour convenience, and affinity insurance facilitates the concept of one-stop shopping.
Affinity groups provide a ready-made market whose demographics and buying attitudes are to some extent known.
The aggregator market is still in its infancy here. Telesure was one of the pioneers in the UK through a site called comparethemarket.com. During the previous financial period, it generated 4m quotes and in the current one it is projected to generate about 6,5m quotes.
Telesure recently launched the first comprehensive aggregator site in SA, hippo.co.za.
