Vodacom Enters Funeral Cover market
Vodacom is looking to make further inroads into the insurance industry.
The communications giant has announced that it will begin offering both life cover and funeral insurance.
Vodacam knows the potential in the R61 billion insurance industry. So Vodacom wants to increase the number of insurance products it currently offers to its contract and prepaid customers.
To achieve this target the telecommunications firm has acquired two insurance companies in the recent past; a short-term and life insurance provider.
Vodacom Funeral Cover Potential
Device insurance alone already earns Vodacom half a billion Rand a year. Andrew Culbert, a managing executive at Vodacom, believes that there is enormous potential for insurance revenue.
And that impressive income is from only 7% of the company’s contract subscribers. In addition, experts project that device insurance revenue will keep growing at 36% annually.
Vodacom Group realises that 67% of South African adults do not have any form of funeral cover.
Knowing that affordability of premiums is a key factor in the generally low uptake, Vodacom has tried to price its products to be within the budget of middle-income South Africans. For just about R250 per month, you can get a life cover that pays out between R200,000 to R10 million.
Culbert explains that with its products, Vodacom is aiming for the lower tier of the market; those who need insurance but don’t know how to get it. They are not aiming for the higher income groups who have multiple policies and need a lot of financial planning.
How Vodacom plans to Exploit its client Base
Vodacom intends to build the trust its brand has earned over the years and the responsible image it has built to offer this new line of service to its clients. Culbert is glad to note that the trust in the Vodacom brand is already being converted into insurance sales.
Adding to these advantages is the edge Vodacom boasts in terms of technology. The company intends to exploit this edge by building access and distribution networks more cheaply than competing insurance firms.
Independent analysts have been surprised by the move by Vodacom to offer insurance products over and above device insurance. This is evidence that the company has seen potential for growth in this industry.
However, it is not likely that the telecommunications giant will want to divert too many resources into a service that is not part of its core business. This is why they will be offering basic insurance cover to the lower tier of the market instead of sophisticated products tailored to the upper middle class.
Other industry experts see the the company move into insurance as a way of shoring up revenues from a voice market in continual decline.
Vodacom is not the lone communications firm branching out into unrelated fields. Major companies in East and West Africa are also seeking to diversify their income streams.
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All info was correct at time of publishing