»    »  Insurance and Assistance linked to Payment Cards and Bank Accounts in South Africa

Insurance and Assistance linked to Payment Cards and Bank Accounts in South Africa

Published OnAug, 2013
Pages30
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FormatPDF
Cement: 2014 Market Review and Forecast
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Insurance and Assistance linked to Payment Cards and Bank Accounts in South Africa investigates the market for insurance and assistance policies linked to banking products in this country. Drawing on the results of an investigation covering 66 individual payment card and bank account products offered by 16 banking institutions and specialised card providers in South Africa, the report analyses the provision of the following broad categories and types of insurance and assistance policy:

- accident / health cover: accidental death insurance, health / hospital cash plans, health assistance, personal accident insurance;

- creditor cover: creditor insurance – life / permanent disability, creditor insurance – temporary incapacity / unemployment;

- personal / identity protection cover: ATM cash theft insurance, card protection insurance, handbag / wallet insurance, identity protection assistance, identity protection insurance;

- shopping cover: extended warranty, price protection insurance, purchase protection insurance;

- travel cover: travel accident insurance, travel assistance, travel health insurance, travel inconvenience insurance, travel insurance - comprehensive;

- other cover: car hire insurance, home assistance, legal assistance, legal expenses insurance, missed event insurance, mobile gadget insurance, mobile phone insurance, personal liability insurance, road assistance, miscellaneous other insurance and assistance;

- concierge services.

Key features of this study include:

- quantification of the market size and segmentation for insurance and assistance linked to payment cards and bank accounts: approximately how much is the market worth in South Africa, how does it break down by broad category, how much is funded by the banking institutions themselves and how much is paid for separately by customers?

- analysis of the operating models used by banking organisations for insurance and assistance linked to payment cards and bank accounts: to what extent do they use external underwriters as opposed to captive or joint venture providers?

- calculation of provider share of partnerships based on number of relationships and partner size: which providers of insurance and assistance services have been successful in establishing relationships for each broad category of cover with the most significant banking institutions and other card issuers or distributors?

- availability of an accompanying PartnerBASE™ dataset that details the availability or otherwise of each individual insurance or assistance enhancement to the 66 payment card and bank account products analysed in South Africa.  

0.0 EXECUTIVE SUMMARY ....... 1

1.0 INTRODUCTION  2
What is this report about?  2
The provision of 30 forms of niche insurance and assistance is investigated in this study  2
Rationale ....... 2
The new research builds upon that pioneered by Finaccord over a period of almost a decade in Europe ..... 2
Methodology . 4
Primary survey .... 4
The research covers 66 specific banking products offered by 16 banks and other organisations ......... 4
Semi-weighted provider share of partnerships.... 5
Market size modelling ... 5
Operating models ......... 6
Abbreviations ...... 6
Definitions of specific types of insurance and assistance  7
PartnerBASE  9
Finaccord .... 10

2.0 MARKET ANALYSIS . 11
Banks and other payment card issuers covered .. 11
Introduction to the banking market .... 11
South Africa's banking system is characterised by a fairly high degree of concentration . 11
Introduction to the payment card sector ...... 11
The compound annual growth rate of credit cards in circulation was 5% between 2009 and 2013 .... 11
Insurance and assistance linked to payment cards and bank accounts ..... 13
Overview of payment card and bank account products analysed . 13
Credit cards account for close to 90% of the products researched ..... 13
Broad types of insurance and assistance cover ......... 14
Creditor insurance and travel-related cover clearly dominate South Africa's market........ 14
Specific types of insurance and assistance cover ...... 15
Creditor insurance is available in conjunction with nearly all credit card products .. 15
Provision rates tend to rise if premium products are analysed in isolation .... 16
Operating models ....... 20
Captive underwriters play a fairly important role in the South African market ......... 20
Competitor share of partnerships ... 22
Accident / health cover: two providers are visible in this field..... 22
Creditor cover: captive providers dominate this segment  22
Personal / identity protection cover: Absa Insurance is active in this domain ......... 23
Shopping-related cover: competition in this area is also limited to two providers ... 23
Travel-related cover: Absa Insurance, AIG and Santam are the main competitors ......... 24
Other cover: AA South Africa provides packaged road assistance for two banking organisations ...... 24
Concierge services: International SOS is the only visible provider in this sphere ... 25
Market size ........ 25
Creditor insurance accounts for the lion's share of South Africa's total market value... .... 25
... with a modest proportion of the total market value funded by the banks themselves... 26

LIST OF GRAPHICS / TABLES

0.0 EXECUTIVE SUMMARY ....... 1

1.0 INTRODUCTION  2
Specific types of insurance and assistance policy researched, grouped by broad category ..... 3

2.0 MARKET ANALYSIS . 11
Number of debit and credit cards in South Africa, 2009 to 2013 ....... 12
Key metrics for debit and credit cards in South Africa, 2009 to 2013 12
Summary of payment card and bank account products analysed in South Africa, segmented by category, 2013 .. 13
Summary of payment card and bank account products analysed in South Africa, segmented by category, 2013 (table) . 14
Relative weight of insurance and assistance policies linked to payment card and bank account products in South Africa, segmented by broad type of cover, 2013 . 15
Penetration of specific types of insurance and assistance linked to payment card and bank account products in South Africa, 2013: all products ......... 17
Penetration of specific types of insurance and assistance linked to payment card and bank account products in South Africa, 2013: premium products only  18
Split of specific type of insurance and assistance linked to payment card and bank account products in South Africa between automatic cover and cover available for an additional fee, 2013  19
Operating models used for insurance and assistance policies linked to payment card and bank account products in South Africa, segmented by specific type of cover, 2013 ......... 21
Competitor share of partnerships for accident / health insurance and assistance policies linked to payment card and bank account products in South Africa, 2013 . 22
Competitor share of partnerships for creditor insurance policies linked to payment cards in South Africa, 2013 .. 23
Competitor share of partnerships for personal / identity protection insurance and assistance policies linked to payment card and bank account products in South Africa, 2013 .. 23
Competitor share of partnerships for shopping-related insurance policies linked to payment card and bank account products in South Africa, 2013 ...... 24
Competitor share of partnerships for travel-related insurance and assistance policies linked to payment card and bank account products in South Africa, 2013 . 24
Competitor share of partnerships for other insurance and assistance policies linked to payment card and bank account products in South Africa, 2013 ....... 25
Competitor share of partnerships for concierge services linked to payment card and bank account products in South Africa, 2013  25
Estimated gross written premiums for insurance and assistance linked to payment cards and bank accounts in South Africa, segmented by broad type of cover, 2013 (USD million) ........ 26
Estimated gross written premiums for insurance and assistance linked to payment cards and bank accounts in South Africa, segmented by cover acquired automatically and cover acquired through payment of an additional fee, 2013 (USD million)  27

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