FMI
FMI
A Better Way to do
Life Insurance PRODUCTION: David napier
Life insurance is so often overlooked because of its complicated nature and expensive premiums. But FMI, a division of Bidvest Life, thinks the process should be easy and clear, with a focus around income benefits rather than lump sum. CEO Brad Toerien tells Enterprise Africa more about the importance of protecting one’s income against injury, illness and death. 2 / www.enterprise-africa.net
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INDUSTRY FOCUS: INSURANCE
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“For us, fundamentally, we believe we exist to help people achieve their dreams and plans by making sure we can provide them with an income if they are unable to earn one,” says FMI CEO Brad Toerien. Talking to Enterprise Africa about how the life insurance specialist is looking to boost its market share in the future, he details two major markers in the company’s history, and says the business is now built around these milestones: offering income protection only and developing of a full range of life insurance benefits; and the acquisition of FMI by Bidvest Life in 2016. “The most valuable asset anyone has is the ability to earn their income,” he says. “As a life insurance provider, we exist to develop living insurance benefits that can help protect or secure
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// FUNDAMENTALLY, YOU CANNOT LIVE WITHOUT YOUR INCOME, YOU NEED IT TO PROVIDE FOR YOUR FAMILY, AND WE WANT TO HAVE A PRODUCT THAT PROTECTS THAT IF SOMETHING HAPPENS TO YOU. WE FEEL THAT IS QUITE A SIMPLE DISCUSSION TO HAVE // your income against injury, illness or death. Because of that, we build all of our products around income benefits first and foremost. If I pass away, I want to leave my family with an income, but traditionally, we were forced to buy a product with a once-off lump sum benefit. That is the driver behind our difference, we want people to think about their income first, protect that income, and supplement it with lump sum benefits. Inherent in this ethos
is a change in a number of industry behaviours that we are trying to push.” Toerien, who took the hot seat at FMI in 2007, is pushing this switch harder than ever following the completion of the company’s acquisition by Bidvest. “Bidvest had a life license that was running and they acquired 100% of FMI. As part of the transaction, we took responsibility for that life license,” he says.
FMI
“The last two years has been a wild ride. The Bidvest transaction came at the perfect time in the perfect place. As a business, I felt that we had just got to the point where we had a launchpad for growth and we had completed our product offering. The deal was our catalyst, it was like throwing fuel on the fire, it has been amazing. Our staff complement has more than doubled in size over the last two years, our sales volumes have grown significantly, and we are in a really exciting place.” A HUMAN STORY Before its recent successes, FMI began its life as a result of a very human story. Entrepreneurs Simon Cordial and Lucia Kujawa started the company in 1995 as a brokerage but realised a gap and a need in the market for income protection. “They identified
that income protection wasn’t available to entrepreneurs or business owners but only to professionals,” explains Toerien. The pair knew the story of a friend who had been hospitalised and almost lost their business. They realised that there was a critical need for this type of cover. “So they quickly licensed a product and pioneered income protection for the self-employed in South Africa,” says Toerien. The business grew quickly and up until 2003, everything was written on a short-term license with FMI effectively an administrator, running on the AIG short-term license. In 2003 – when Toerien joined the business – there was a swing away from writing on a shortterm license towards writing on a life license. Toerien says he “fell in love with the business” and when the founders
stepped away, he was excited and happy to take the reins. “What we did had got into my blood,” he says. “By offering products that paid people an income when they can’t work gives me a nice feeling, to know that you are helping people in a time of need. It means businesses can keep running, families stay fed and things keep moving forward.” But, despite his love for the business and passion for the industry, Toerien’s FMI journey has not always been straight forward. “Looking back in hindsight, between 2008 and 2016 was not a smooth period,” he says. Social, economic, political and many other issues hounded businesses all over South Africa. “I’d love to say we grew steadily and everything worked according to plan but we had significant
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// AS A LIFE INSURANCE PROVIDER, WE EXIST TO DEVELOP PRODUCTS THAT CAN HELP PROTECT OR SECURE THAT FUTURE INCOME AGAINST INJURY, ILLNESS OR DEATH // challenges,” he admits, “there were at least one or two economic downturns, we had to re-structure the business to adapt to changing distribution environment, and we had to transform the business from operating as an
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administrator to fully-fledged life insurer, which meant we had to develop a number of skills. We had to significantly expand our product range from very specialist income protection offerings to incorporate a complete life insurance risk offering. Over those eight years, there was a lot of building foundations and optimising distribution.” When Bidvest entered the fray, FMI was in a good place and was setting its sights on revolutionising the market. Importantly, Bidvest supported and encouraged the vision and plans for the future. Prior to the acquisition, Toerien was the majority shareholder in FMI and, along with a partner, was loving life within a successfully growing
business. The discussion around Bidvest was giving up some freedom but gaining significant backing – a real dilemma. “They approached us; we were not looking for anything at the time. Myself and Craig Harding owned the vast majority of the business and we had our independence – it was our business to run and we were having a lot of fun. We definitely were not looking for another corporate partner,” Toerien remembers. “But when Bidvest approached us, we sat down and we analysed the opportunity before quickly realising that being able to partner with Bidvest gave us the best of both worlds – we were losing some level of independence but it would help
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us achieve our dreams. To become a significant business, having a partner like Bidvest is critical. They have been great shareholders and the perfect fit for FMI – providing us with incredible support, whilst allowing FMI the independence to continue to grow through our entrepreneurial spirit.” As of March 2017, FMI began working through its own life license as part of Bidvest Life. Since then, there has been no looking back and FMI has been aggressively pushing its mantra of ‘income first’. “Our concern is that behaviour in the market is not rational and we are not buying products in a way that we should be buying them to protect ourselves most efficiently,” claims Toerien.
FMI CEO - Brad Toerien
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INDUSTRY FOCUS: INSURANCE
INCOME ABOVE ALL FMI strongly believes that while pay-outs from lump sum benefits are perfect to settle large debts or pay for once-off expenses, they should not be used to provide an income. 62% of South Africans are behind on their debt payments, which means even a temporary break in income could have devastating long-term consequences. FMI also suggests that seven in every ten people will have at least one disability in their lifetime that will prevent them from earning an income. Following a recent industry survey performed by FMI, Toerien suggests that educating customers and simplifying processes is vital for the business. “I think there is still a misunderstanding of what life insurance really is and there’s a general sense that people are overwhelmed by the complexity of the product and process,” he says. “That puts a lot of people off. We do not think it needs to be that way. It should be a simple discussion. Fundamentally, you cannot live without your income, you need it to provide for your family, and we want to have a product that protects that if something happens to you. We feel that is quite a simple discussion to have and we can design a product to solves that problem in a really simple way. Our challenge is to cut through the noise and demystify insurance so that customers understand the need and how to protect themselves. “We want people to recognise life insurance not as a grudge purchase but as a crucial part of their financial planning.” Asked if he thinks the shift in attitude towards income protection is growing in South Africa, Toerien is buoyant. “We are starting to see some real traction. We have seen significant changes through the advisors that are working with us,” he says. “Our mix of business is completely different to what you would see across
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the rest of the market – it’s largely income benefits and pushes a stronger play towards disability cover. With the advisors we speak to, we’ve been successful and our challenge is to do that on a larger scale.” He wants more people to be able to access more products in more ways, while never compromising on quality. “We do that by continuing to develop our products and make them accessible to more people, building a strong digital platform, making insurance more relevant, more accessible and easier to understand, and we continue to work with more advisors and digital industry experts to close that loop.” FURTHER GROWTH The future looks extremely bright for FMI. In an industry in which many struggle to even stay apace of legislative and regulatory changes, this front-runner is paving a way for itself to climb to the top. “We are opening offices around the country. We see huge potential in the South African market,” says Toerien. The growth strategy has been carefully crafted and will not see the company overstretched. While geographic and product range expansion are thoughts for the longerterm, they are not being considered
// THE DEAL WAS OUR CATALYST, IT WAS LIKE THROWING FUEL ON THE FIRE, IT HAS BEEN AMAZING. OUR STAFF COMPLEMENT HAS MORE THAN DOUBLED IN SIZE OVER THE LAST TWO YEARS, OUR SALES VOLUMES HAVE GROWN SIGNIFICANTLY // at this stage. Toerien explains that the company still has so much market opportunity in South Africa that cross-border moves are way off yet and new lines are inevitable but not for some time. “We don’t have any plans to expand into sub-Saharan Africa or anywhere else in Africa at the moment. We have our hands full here. Expansion into other product lines feels like something we are going to have to look at but it’s not in our immediate future. “Our sales team is effectively a team of business developers that look after and service our independent advisors. That team continues to grow
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and has grown significantly. As we grow that team, we are able to build relationships with more advisors so it’s a key to our growth.” Of course, the economic climate in South Africa has raised some concern with businesses looking for substantial growth. Even after political change, the country’s growth prospects remain weak and researchers predict individuals will remain tight-pocketed for some time to come. But Toerien remains typically positive. “As a smaller insurer, we are still growing quite quickly. We are able to grow almost regardless of what happens at a macroeconomic level,” he says. “Our view as a business is that we are bullish about the country. We are very positive about where South Africa is going and we think
there are some incredibly strong fundamentals in our country. Having said that, we know there are real challenges; unemployment is a real problem, the state of education is not in a great place, and we need to see how we can contribute to solving those problems. We do that through our core business and we also focus heavily on education through our CSR programmes.” With FMI remaining small in stature compared to some of the longer-established players in the market, it maintains the ability to move quickly and make speedy decisions. This nimble approach, combined with the strong knowledge of the sector that has been developed over 23 years, has helped create a formidable player. “We are very excited about
where we are. We are in an incredibly important position. We feel like a 22-year old start up that can move quickly and think creatively but with 22 years of deep experience at the more complex end of the life insurance spectrum,” says Toerien. “And now with the backing of Bidvest, we can think on a large scale and know that we have shareholders with credibility and a balance sheet to back us. It’s a really amazing position to be in, and I don’t think there are too many businesses in this fortunate position,” he concludes.
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