HomeNewsEconet, FML deal reinvents life industry

Econet, FML deal reinvents life industry


Econet Wireless Zimbabwe has struck a smart deal with the life assurance unit of its associate, Afre Corporation, with potential to radically change the game in the industry in terms of both market share and premium income.

The country’s largest telecoms operator, which controls about 18% of Afre Corp, on Wednesday launched a “free” short-term life assurance product called EcoLife under a mutual arrangement with First Mutual Life (FML), which currently controls the second largest share of the local life market.

The scheme takes effect today, a week after obtaining regulatory clearance from the Insurance and Pensions Commission (IPEC), and is primed to boost Zimbabwe’s overly depressed life insurance penetration rate currently estimated at under 2%, taking advantage of Econet’s huge subscriber numbers.

Econet CEO Douglas Mboweni said it took 15 months to negotiate and agree on underlying terms.

The policy is short-term, covering 3 months, packaged on a pay as you go basis and gives subscribers up to $10 000 cover for funeral, education and other life risks.

Under the deal, Econet pays premiums for its big-spending subscribers based on their conventional airtime spending patterns, while FML assumes the role of underwriter, accepting premiums and settling claims.

“It’s an offer to all Econet subscribers of free life cover and every Econet subscriber qualifies automatically,” Mboweni said.

“All a subscriber will have to do is register and buy a $3 airtime package consistently for three months.

This means that the more airtime one buys, the more cover they get, up to a maximum payout of $10 000.”

The deal is seen adding a multiplier to Econet’s monthly turnover and muscling FML to the fore of the local life assurance market by creating a huge pool of investment funds, using Econet’s large subscriber base currently estimated at about 4,5 million, as a foothold.

Worse, it also threatens to wreak fresh trouble for the life and funeral assurance industry still bleeding from a recent regulatory clampdown by IPEC, this time through market forces.

The clean-up, which started in June, has so far reduced the number of life assurers and funeral assurers to eight and six, respectively.

Asked if the Econet-FML synergy would not destroy the funeral assurance industry, Mboweni chuckled and said the answer lies in innovation and competitiveness.

“In modern competitive markets, survival is all about innovation.

If you don’t innovate, you sink.”

Afre chief operating officer Sibusisiwe Ndhlovu concurred and added Afre had also adopted innovation to child.

“We continue to look at various products that boost our competitiveness.

This (EcoLife) is one of them,” she said.

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