- FNB launched its short-term insurance business on Thursday.
- It has been operating it behind the scenes for three years, but it’s ready to put it on the spotlight now.
- It now has 12 products and collects R500 million in annualised premiums.
FNB is now selling car insurance, discounted doctor’s consultations, gap cover, and even a retirement annuity product.
The banking group officially launched its short-term business, which it has been building quietly behind the scenes for almost three years.
The business already has 150 people employed, and it has developed 12 products to compete in almost every sphere that traditional insurers offer under their personal lines product mix.
Jonathan Havemann, CEO for FNB Short-term Insurance, said in the three years that the business has been operating under the radar, it has amassed 250 000 customers, and FNB is collecting roughly half a billion rand in annualised premiums from them.
“All that sort of stuff has happened behind the scenes … we are not really a hard-sell in FNB Short-term,” said Havemann.
He said FNB got its short-term insurance licence towards the end of 2018. It has been steadily adding products and some, like the legal insurance cover, already have a good market share.
The last piece of the puzzle that FNB wanted to add before it puts the spotlight on its youngest business was the car and home insurance. It launched that internally to staff members six months ago.
Lee Bromfield, CEO of FNB Insurance, said the bank was waiting to get to the point where it could integrate all its short-term insurance offerings into the bank and investment business.
“We like to do things properly,” said Bromfield. “But now we are comfortable that we are ready. The platform is working,” he added.
While it has taken three years to put that business under the national spotlight, it looks like FNB is ready to throw some punches to displace existing players with the discounts it’s offering. For instance, FNB and RMB Private Bank customers could get up to 15% of their premiums back in eBucks, while those who work from home stand to earn additional discounts of up to 20%.
Havemann is also not planning to do a hard sell because FNB Short-term is confident that it already has the attention of millions of potential customers.
“As a bank, we are in a fortunate position because we have the trust of our clients. Money comes into their accounts, we see all the payments going out, and we have the opportunity to help clients share how they are earning their income and how they are spending it,” said CEO of FNB Retail, Raj Makanjee.
Bromfield said its analysis shows that only 20% of FNB customers are adequately covered. So, even without convincing people to switch from their current short-term insurers, it has 80% of its customer base to potentially sell to.
“FNB customers as a whole are paying over R20 billion a year for short-term insurance to different providers. We don’t want to put in targets on how much of that we can take. But in the life business, we’ve done a great job at getting penetration,” he said.
Bromfield said over 50% of life insurance debit orders going off FNB account holders now go to the bank. He hopes he can do even better on short-term insurance.
Source: News24