Liberty plans to meet need for education insurance

Old Mutual also indicated in a recent interview that demand for education investment solutions among the middle class was high as consumers sought to ensure their children received a good education.

Liberty's emerging consumer markets financial director and acting managing director, Michael Gondo, said the insurer had conducted a study to understand what consumers needed and education benefits had topped the list.

The company's research had found that other insurance benefits were not enough to sustain the education of children in the event of a death of a parent.

"We looked at how best we could launch an education benefit in the emerging consumer market," Gondo said. "The best way to do it (was to make) it part of a funeral benefit. When a person dies a funeral plan normally pays out, but there is not much left."

Premiums

In the emerging consumer segment, Liberty targets clients who earn a gross income of between R3,000 and R11,000 per month.

Gondo said if there was no death of a parent until the child was 18 years old then Liberty would pay back 10% of the premiums.

Liberty has generally been praised for being innovative by the community of financial analysts although one investment banking analyst's report was lukewarm about Liberty's potential to capture the entry-level market in the public service - a segment considered to be a "sweet spot".

A Credit Suisse report issued last month questioned Liberty's distribution footprint when it came to tapping the entry-level market.

Gondo said government employees were a market that the insurer had identified and, despite being a late entrant, Liberty was making inroads into this segment. Liberty would not just chase market share but seek good quality clients.

In the emerging consumer market cluster, Liberty has close to 500,000 clients and 955 tied sales agents. Gondo said the company was likely to keep the numbers of its tied sales agents at that level. He said Liberty, on average, wrote about 10,000 policies a month.

Source: Business Day via I-Net Bridge