Mmegi

Hollard Life leverages digitisation for financial inclusion

Seeing opportunities: Tau
Seeing opportunities: Tau

Hollard Life is hoping consumer education campaigns, the expansion of access through channels such as digitisation and more tailor-made solutions, will lift the country’s low insurance coverage rates. Managing director, Tabuya Tau, speaks to MBONGENI MGUNI

Mmegi: Kindly give us a brief description of Hollard Life, its history in Botswana, and its position in the market

Tau: Hollard Life Botswana (HLB), established in 2011, and licensed by Non-Bank Financial Institutions Regulatory Authority (NBFIRA) in 2012, became the 8th registered life Insurer in the country at that time. The Life assurance company was a continuation of the strong legacy of Hollard Insurance Botswana, which first opened its doors in 2005. As a proud member of the Hollard Group, HLB leverages over 30 years of insurance expertise and a steadfast commitment to innovation. Operating under Botswana’s legal and regulatory framework, Hollard Life Botswana is wholly owned by Hollard Holdings Botswana. The Batswana led ownership is supported by access to the extensive resources and expertise of Hollard South Africa.

Dedicated to addressing the unique needs of Batswana, Hollard Life offers market-focused insurance products, including life assurance, savings and funeral plan products. Through strong local partnerships and a keen emphasis on exceptional customer service, the company has grown into the top three in market share within just 12 years of operation reflecting its remarkable growth and enduring commitment to excellence.

Mmegi: NBFIRA's latest annual report shows that the industry had ten life insurers as at March 2024. Please share the trends in terms of competition in the market and how Hollard is working to strengthen its position.

Tau: The Botswana life insurance market is competitive, with ten competitors in this space actively vying for market share. Trends include an increased focus on digital transformation, product diversification, and enhancing financial inclusion, especially among underserved communities.

Hollard Life Botswana has remained proactive in strengthening its position through innovative product offerings, strategic partnerships, and leveraging digital platforms to improve accessibility and customer experience.

In addition, Hollard Life embraces a distinctive approach that prioritises partnerships, customer empowerment, and creating better futures for all stakeholders. This philosophy underscores a culture of service excellence and innovation, ensuring Hollard continues to lead through collaboration and community impact.

Mmegi: Analysts have previously noted that the levels of life insurance cover in the country are low or below optimal, due to issues around consumer awareness and limited formal sector employment. What is your view on these issues and the level of life insurance cover in the market?

Tau: Life insurance coverage in Botswana remains below optimal levels, shaped by both structural and socioeconomic factors. Limited consumer awareness of the role life insurance plays in financial security, coupled with challenges like low formal sector employment, significantly impacts penetration rates.

A substantial portion of the population operates in the informal sector, where traditional insurance products may seem less accessible or relevant, often due to affordability constraints or consumers’ lack of service knowledge.

To address these barriers, ongoing consumer education is vital to highlight the value of life insurance as a key component of financial planning. Innovative solutions, such as integrating insurance products with mobile platforms, are proving effective in enhancing accessibility.

Hollard Life Botswana has embraced this approach through its first to market Karabo product, leveraging BTC’s Smega platform and enabling premium payments via Mascom’s MyZaka. The company actively engages communities in underserved areas, bringing market leading products that help ensure that all Batswana are given an equal and fair opportunity to access financial stability for themselves and their loved ones. These innovations provide affordable and relevant coverage tailored to the unique needs of underserved segments such as the unbanked by leveraging the convenience and accessibility of mobile money services. These initiatives leave a lasting impact by often facilitating the establishment of community shops, which not only provide access to services but also stimulates local economies by creating a hub for circulating money within the community. This is a testament to Hollard Botswana’s commitment to shared value and empowering communities.

Hollard Life Botswana remains steadfast in its mission to close the insurance gap through customised offerings and focused awareness campaigns. By building strategic partnerships and implementing creative distribution methods, the company is committed to providing financial security and promoting a culture of informed, long-term financial planning among Batswana.

Mmegi: Life insurers have also previously spoken about the need for more assets in the capital market to match their liabilities. What is the trend around this and your comment on the availability of investable assets in the local market?

Tau: The availability of investable assets in Botswana's capital market remains a significant consideration for life insurers like Hollard Life, given the nature of long-term liabilities inherent to the industry. Matching liabilities with assets is critical for ensuring financial stability and fulfilling policyholder obligations over time. However, the limited depth and diversity of the local capital market present challenges for life insurers seeking to align their investment portfolios with their long-term obligations.

In Botswana, the capital market is relatively small, with a narrow range of instruments available for investment. The government bond market is not as extensive as in some other economies, and corporate bond issuance remains limited. This constrains the ability of life insurers to diversify their portfolios fully or match asset durations with long-term liabilities effectively. Additionally, the dominance of traditional asset classes, such as equities and fixed income instruments, leaves little room for life insurers to explore alternative investments that could provide better matching opportunities.

Hollard Life Botswana recognises these challenges and adopts a strategic approach to navigate the market's constraints. By engaging with stakeholders, including regulators and policymakers, Hollard Life supports initiatives aimed at broadening the range of investable assets in the local market. Diversifying investment strategies within the existing framework, while seeking regional and international opportunities where permissible, is another way the company ensures its portfolio remains robust and aligned with its obligations.

Moreover, Hollard Life is committed to maintaining a prudent investment strategy that balances risk and return while prioritising the security of policyholder funds. Collaborating with industry peers and contributing to efforts that deepen and diversify the capital market are integral to this approach. These efforts align with Hollard Life’s vision of developing financial security and supporting economic growth in Botswana.

Mmegi: Hollard Life is progressing the acquisition of Absa Life Botswana. What does this transaction mean for Hollard Life, and what is the motivation behind the deal?

Tau: The acquisition of Absa Life Botswana represents a significant milestone for Hollard Life. This strategic move aims to consolidate Hollard’s position in the market by expanding its customer base, diversifying its portfolio, and achieving higher operational efficiencies.

Customers can expect an elevated customer experience through being accessible and visible by expanding to more regions within the country and leveraging current and new partnerships further. These include strong bancassurance partnerships with these being enabled by our digital platforms including partner portals and integration capabilities that support the ease of doing business for our partners. Hollard Life’s digital transformation journey for the short term is aimed at optimising and automating processes as well expanding self-service platforms aimed at delivering seamless service to our customers.

Overall, the transaction aligns with Hollard’s vision of being the country’s favourite insurer by offering comprehensive solutions that meet diverse customer needs, while achieving our purpose of delivering better futures to our customers. It also demonstrates Hollard's commitment to growth and innovation in Botswana’s insurance sector.

Mmegi: Is this transaction more about Hollard Life acquiring or more about Absa divesting or looking for an exit from its life insurance business?

Tau: The transaction reflects both strategic objectives: Hollard Life's ambition to grow and Absa's strategic refocus on core banking services. For Hollard, the acquisition provides an opportunity to strengthen its market presence and gain valuable assets and expertise. For Absa, it represents a deliberate exit from the life insurance business to streamline its operations and prioritise banking. The transaction benefits both parties and enhances the competitive landscape of Botswana's insurance market.

Mmegi: Kindly share Hollard Life's outlook for the rest of the year and into 2025, given the contracting economy with limited employment opportunities for most citizens.

Tau: Despite economic challenges, Hollard Life remains optimistic about the future. The focus for 2024 and 2025 includes:

  • Service Excellence: Enhancing customer experience and streamlining processes for faster turnarounds.
  • Community Engagement: Expanding initiatives to raise awareness and educate the public on life insurance benefits and financial literacy.
  • Product Innovation: Deploying affordable solutions tailored to be even more inclusive to the Botswana market.
  • Footprint Expansion: Offering the market more channels to access Hollard Life’s innovative services.
  • Hollard Life accelerating its commitment to driving financial inclusion and enabling better futures for Batswana, even amid economic constraints
Generally, through our enhanced ability to reach higher levels of digital maturity, Hollard Life Botswana aims to bring our customers and partners closer to us and our products and services while redefining life insurance.

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