Reinventing Insurance Not Likely To Solve Uninsurance Problems

  • by Phiwa Nkambule |
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When we decided to start an InsurTech company at the end of 2014 our main goal was to find the best way to make health insurance accessible to 80% of the South African population who are not on medical aid or health insurance and to make car insurance accessible to 65% owners of cars in South Africa who are uninsured.

Over the years we studied and developed solutions in P2P insurance, crowdfunded insurance, telematics and decentralized insurance using blockchain. Our focus developing solutions to reduce operation costs, improve underwriting and reduce fraudulent claims which we successfully did since our establishment in 2015. At the end of 2016 managed to overcome entry barriers and got into the market through partnerships with registered FSPs and it was only after we got that we discovered that reinventing insurance wouldn’t solve the challenges faced by uninsured individuals and companies in South Africa.

The country currently faces slow economic growth, low tax base, low levels of employment, high levels of poverty and credit downgrades. The medical scheme growth rate slowed down by 2.7% and the insurance penetration rate sits at 13%. The question we had to ask was why people take insurance in the first place and then work from there. Insurance is taken for protection against unforeseen/unbudgeted for future losses/financial shocks. This, however is a risk most uninsured are willing to carry in the current economic climate; taking up a new insurance policy is the last thing on their minds. That is why we’ve stated developing uninsurance products with the first being for health.

Medical bills are too expensive and price transparency is foreign in the healthcare sector. Patients who are uninsured/under-insured find it difficult to pay out-of-pocket for medical consultations and procedures; meanwhile, doctors have difficulties dealing with insurance, resulting in revenue loss.

The first solution that comes up for the uninsured has been medical aid/health insurance so we had to think deeper. We had to take ourselves to a point before medical aid and health insurance were invented to come up a solution that can solve the R400 Billion problem (Estimated South Africa Healthcare Spend).

We developed a medical practice and a digital platform that gives patients the freedom to negotiate prices for medical consultations and procedures. Through this patients can save 20-80% on retail prices without sacrificing quality care and doctors can benefit from improved efficiency, increased business, not having to deal with insurance, and filling open/cancelled slots.

The patient chooses a procedure and picks a price, after that they are matched with a pre-screened, certified healthcare provider and then make payment on the platform. We find this to also be an effective solution to healthcare payment issues in that it allows patients with high deductible plans to pay upfront in cash.

Riovic will continue to search for solutions to solve uninsurance problems in South Africa and beyond.