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Old Mutual

About the Project
Project Name: 
Accessing the low income market
Type of Facility Project: 
Innovation Grant
País de operaciones: 
South Africa
Project Thematic Focus: 
Insitutional models and business processes
Type of Risk Carrier: 
regulated insurance company
Type of Distribution Channel: 
Mutuals, community-based organizations
Non-governmental organization
Project Description: 


Old Mutual aims to develop a proposition for the low-income market (monthly income up to R3500/$460) and deliver access to a broad spectrum of financial services that is not only sustainable but provides real value to clients both individuals and communities in rural and peri-urban environments.

To test alternate distribution challenges, the project will enable delivery of community based and individual product solutions. Old Mutual will in collaboration with the Group companies test the “one stop shop” approach to deliver a full spectrum of financial services.

Through delivery of consumer education programmes, the project seeks to improve the financial literacy of the low income market and stimulate demand for an uptake of appropriately designed and distributed products at group and individual level.

Consortium Members: 


The project targets low-income individuals and communities in peri-urban and rural areas that despite their income levels are economically active and need appropriate access to financial services. The vision is to target an outreach of 1 million clients by 2020.

Lessons from the Project
Learning Agenda: 
  • How effective are distribution models that take account of community involvement, technology impact, salaried vs. alternate distribution agents and the differences between rural and peri-urban environments?
  • How does the financial behaviour of low-income households impact product development, marketing and distribution?
  • What is the impact of consumer education programmes on purchasing behaviour?
Emerging Lessons: 
  • Prior market research indicates that both group and individual buying behavior exist within the foundation market.
  • Microinsurance activities require different processes than traditional business, both for product development and monitoring and evaluation.
  • A group product design with a flat rate enables inclusive coverage.
  • Enabling inclusive coverage, such as reducing or eliminating the waiting period improves sales.
  • It is important to segment the market, as burial societies in South Africa are of two categories, smaller burial societies that are managed by the community, and larger groups that are managed by funeral parlours, each of which have different characteristics and needs for funeral product.
  • Group product management requires a different system than individual products.
  • Too much flexibility in the product design can be simplicity’s enemy – especially in a retail distribution model where most sales are passive.
  • Regular monitoring of mortality experience and adjustments to rates and/or benefits has resulted in a significant improvement in claims ratios.
  • Direct sales costs can be contained if the product is sold on a group basis.
  • Recruiting sales agents from the local communities has proved successful to build trust among the population.
  • Incentive models need to be easy to understand and motivate the sales force. It is not worth developing a complex model that leads to no bonuses paid, and hence no change of behavior among the sales force.
  • Competition leads to price pressure and greater efficiencies.
  • It is important to involve the distribution channel in the marketing campaign design, as it knows the market.
  • In a multi stakeholder partnership, such as the one for Imbizo, it takes considerable "central" management for the partnership to work.
  • Working in a highly regulated environment adds constraints to reach the market.
  • It is difficult to efficiently motivate and monitor the front line staff in the retail distribution model.
  • Expense ratios for both models (direct sales and retailer model) are comparable.

Date of last Learning Journey update: January 2012

About the Organization
Tipo de vínculo con el Fondo: 
Innovation grantee
Country of Head Office: 
South Africa
Region : 
Type of institution : 
Insurance industry
Participation in Microinsurance: 
Risk carrier
Organizational Overview: 

Old Mutual is a leading international long term savings group, established in 1845 in South Africa and now operating in 38 countries world-wide. Old Mutual operates the largest financial services business in South Africa providing wealth management, investment products, retirement savings, life, disability and health insurance to individuals and groups. Old Mutual operates in other parts of Africa namely Namibia, Zimbabwe, Malawi, Kenya and Swaziland.

Old Mutual is a trusted brand, with a strong market presence among South African consumers across all market segments. Its banking business in Africa is conducted by the Nedbank Group and its South African general insurance business is conducted by Mutual & Federal Insurance Company. Old Mutual has the controlling interest in both companies.

More about the Organization

"We recognize the challenges presented by the target market and especially that serving low income communities requires a business model different from traditional commercial financial services business models."

Shailesh Devchand, COO Foundation Market

"The target market we call Foundation and which we seek to understand and deliver to successfully through this initiative is the new mass market of the future. Not only will our presence in this segment be good for Old Mutual, it will be good for South Africa!"
Marshall Rapiya, Managing Director Retail Mass market