Direct Insurance

Direct insurance has taken the insurance industry by storm in recent years. Essentially it refers to the taking out of insurance by a client directly with the insurance company, rather than going via an intermediary such as an insurance broker. Of course this has caused quite a lot of consternation in certain sectors of the insurance industry, not least among brokers themselves. It has however gained much popularity among clients, as it is perceived to be a more cost effective and efficient way of dealing with insurance needs.

The idea for direct insurance came out of a gap identified as developing in the industry as a result of it becoming overly bloated with intermediaries. While it can be, and indeed has been and still is, strongly argued that insurance brokers serve a valuable purpose of guiding clients through what can be an intimidating process of understanding how insurance policies work, how to go about sourcing them, and how to identify the most beneficial ways to take out insurance, this all has to be paid for, usually in the form of commissions to the brokers - which obviously are funded by slightly increased premiums. Thus the idea was born, that if the brokers are bypassed, insuring oneself should become cheaper.

What has also helped to boost the direct insurance angle is that insurance companies have become more willing to make insurance simpler and more transparent - largely due to government pressure and concomitant changes in legislation, it has to be said. This has meant that the average person in the street can now decipher an insurance policy in a meaningful way, and has become less intimidated by dealing with insurance as a whole. This has significantly helped to remove the need to rely on an expert advisor such as an insurance broker.

Taking advantage of this, direct insurance companies have sprung up like mushrooms on a moonless night. One of the first and most successful in South Africa is Dial Direct. There is also the well-known OUTsurance. These and other direct insurers work via sophisticated call centres, allowing prospective clients to simply call up, choose their insurance options and conclude their insurance agreements over the phone. This is fast and efficient, and has proved to be a highly successful business model. The Internet has obviously also played a role, with online insurance shopping also contributing to the boom in direct insurance.

South African Direct Insurance Companies