The CHALLENGE

• Value added products (“VAPs”) are additional benefits included in standard insurance cover or financial services products to differentiate or enhance the underwritten or primary cover, or the underlying financial product. In particular, VAPs augment the saleability of standard insurance cover, especially at point of sale, as policyholders perceive that the benefit of the VAP exceeds the additional cost which is added to the premium.

• However, VAPs have come under the scrutiny of the FSCA, with its strong stance and policies on treating the customer fairly (“TCF”). Historically the low industry claims and utilisation ratios of VAPs have lead the FSCA to question the effectiveness of VAPs as a product class. The onus is on the FSP to quantify and justify the value of VAPs, which they have generally struggled to do effectively.

• The industry’s growth is dependent on ongoing market development within the emerging markets. Driving the awareness of financial products and services through consumer education initiatives is key in creating financial inclusion. Insurers attempt various product awareness campaigns, few of which result in any significant increase in the number of new or different types of cover. Few consumer education campaigns provide continuous and automated engagement, and even fewer provide the detailed reporting required to track the effectiveness of the initiatives.