AllLife looks to the future
AllLife looks to the future—The Weekender
September 12, 2009
THEY say life insurance is sold, not bought, simply because it’s the kind of product no one seeks to buy but someone else has to persuade them to acquire. But three years ago a group of engineers and MBA graduates decided to change all that by developing a kind of life policy that would not need to be sold and would ultimately change the lives of those who bought it.
AllLife is the only company in the world that seeks to provide affordable life cover to South African residents who have been diagnosed with HIV , and the company has now extended its service to include diabetics.
Like HIV, diabetes is a long- term manageable disease.
Until AllLife it was almost impossible for an HIV-positive person to get life cover. When a quote was generated it was usually at an astronomical price, as much as 10 times the standard cost for life cover.
Life insurance is an enabler for most financial products, so the lack of a life policy ultimately meant many HIV-positive South Africans were being denied access to other financial services like mortgages and business loans.
But what makes AllLife particularly special is not that it provides life cover for a market the industry has chosen to ignore completely, but how it goes about doing so. Unlike most insurance products whose risk calculations are made using historic data to determine the most likely future behaviour, AllLife ignores historic behaviour for pricing and creates a risk calculation based on future expectations.
AllLife can afford to ignore historical information because it has created a system it knows will allow it to monitor or alter the behaviour of any client it insures.
Having created an infrastructure that allows it to access the medical records and test results of a client directly from laboratories without waiting for the client to provide the details, AllLife can track the behaviour of all clients and encourage them to stay healthy for as long as possible.
AllLife gives clients regular reminders of doctor’s visits and helps them to maintain a healthier lifestyle. In fact, whereas most insurance companies contact their clients only when a premium is unpaid, AllLife communicates with clients at least once a month.
As a result it is able to improve the health of the majority of its clients. “Over the years we’ve noted that just by having an AllLife policy we see about a 15% improvement in the health of clients,” says AllLife MD Ross Beerman. “We still don’t know why, but we suspect that just by having life cover, people who thought their lives were over started believing they could enjoy a long life despite their illness.”
AllLife can provide any person with a quote within 24 hours of completing an application at prices five to 10 times lower than old-generation products. When it first opened its doors, Ross and his team were invited to present their business case study to the World Underwriting Conference.
“We still get a lot of calls from people in countries all over the world asking us to provide them with life insurance. But unfortunately our process can only accommodate South African residents.”
When one considers S A is home to the second most competitive insurance industry in the world, as measured by the percentage of the population with cover, creating an innovative product that could become a sustainable business has been no mean feat.
The company, launched in 2006, increased its customer base by about 250% last year alone and is now raising more capital from an offshore private equity firm. “We must be one of the few companies in the industry that is growing and actively hiring; we expect our staff to double over the next 12 months,” says Beerman.
After three years in operation AllLife has about R1bn in policies and about 5000 clients on its books, although it has yet to reach profitability — which is normal for insurance companies .
The latest figures show 8,5% of professionals in S A are HIV-positive and there are 2,5-million HIV- positive South Africans in LSM5 and above. AllLife is developing arrangements with large insurance companies to allow them to cover clients they would otherwise turn away, while taking advantage of their extensive broker distribution networks.