Solvency helps consumers end challenging year on positive note

Mutoda Mahamba, CEO and founder of Solvency

COVID-19 has put major stress on the global economy, but local FinTenchs are giving local consumers new ways to seamlessly take charge of the insurance, while adding to their life savings...

2020 has been one of the most challenging years in the last century, and consumers across the world are fighting to keep their lives stable. Not only has COVID-19 caused an enormous amount of physical and emotional harm, the economic consequences have been dire, with unemployment levels spiking in most countries, including South Africa.

Insurance and savings have been key challenges for consumers through the crisis. On the one hand, households can’t afford to increase their exposure to risk by cancelling their insurance policies. On the other hand, households know that now more than ever it is crucial to save for the future. And in households where incomes have been suddenly reduced, there often isn’t enough money to save and maintain insurance protection.

‘It’s a conflict that a lot of people really struggle to negotiate,’ says Mutoda Mahamba, CEO and founder of Solvency, an insurance product powered by the New National Assurance Company (NNAC), an authorised Financial Services Provider and “A” rated short-term insurer. ‘But consumers shouldn’t lose hope. There are ways to creatively address the problem. Solvency, for example, has helped South African families resolve the dilemma.’

The Solvency solution offers short-term insurance cover where consumers use their motor and household premiums to save and invest seamlessly, allowing South Africans protect themselves and their families against key life risks while still saving for the future. Given that on average 90% of consumers are expected to claim less than they will ever pay in premiums, the Solvency Solution is a simple way of converting unclaimed premiums into savings. Solvency launched in the South African market early in 2020, and recently strengthened its offering with the announcement of its partnership with NNAC.

‘2020’s unique circumstances have shown why the Solvency solution is so powerful,’ explains Mahamba. ‘At a time when consumers are urgently looking for innovations that allow them to stabilise their financial wellness, Solvency has been able to meet this need by allowing them to take positive action, even in the face of challenging circumstances.’

Solvency clients can choose how much of their monthly car and household insurance premium (up to an average of 45%) is allocated to an Insurance Savings Account (ISA) in their name, in a similar fashion to a medical aid savings account. The client soon achieves a position where the savings portion of their policy offers effective risk cover. Thanks to this new approach to insurance, consumers who once faced a worrying choice between saving money and taking out short term insurance can now do both.

In addition to the financial relevance of its offering, the Solvency experience is supported by a sophisticated, easy-to-use digital interface.

‘We get a lot of feedback from consumers about how easy the digital interface is to use’ says Mahamba. ‘In a year when the whole world has moved online the ability to deliver an exceptional, smooth digital experience really matters. It’s been very pleasing to see the strength of the brand’s performance in this area.’

With COVID-19 vaccines on the verge of being rolled out globally, it’s likely that the South African economy will slowly inch toward recovery in 2021. But life is unlikely to ever fully return to its pre-COVID-19 state, and the demand for innovations like the Solvency solution looks set to keep on growing.

‘The basic principles of savings and risk management changed fundamentally in 2020,’ concludes Mahamba. ‘Even as economies recover, there’s little doubt that South African families will need to follow a different approach to maintain their savings while ensuring they’re protected against key risks. Solvency helps them do exactly that, and we expect our presence and relevance in the market to increase in the year ahead.’