Johannesburg - Vodacom has launched a new funeral insurance product following the successful launch of its insurance business more than four years ago.
Vodacom said the Funeral Cover 4 You and Your Family came as a result of interest from its subscribers.
Andrew Culbert, the managing executive at Vodacom’s Telcosurance, said: “With the launch of the Funeral Cover 4 You and Your Family products, we have seen a significant spike in interest from consumers with up to 7 000 new customers viewing the product a day.
“We are delighted with the take up from early adopters and expect that the general market will adjust to this new and innovative way to get and pay for funeral cover in the not too distant future.
“We expect to grow our policyholder base to at least 50 000 customers over the next two years,” he said.
The launch of the new product follows the successful launch of its insurance business in April 2012, which has generated more than R1.5 billion since its launch.
The company said its funeral cover would offer customers options to pay weekly or monthly when they recharge using their cellphones.
Vodacom said since the launch of its insurance cover more than a million Vodacom customers had signed up for a range of insurance policies, which include cellphone, laptop, life and funeral cover, adding on more than 13 000 new customers a month.
The insurance business has a compound annual growth rate of 20.31 percent, according to Culbert.
Peter Takaendesa, a portfolio manager at Mergence Investment Managers, said: “The key challenge for the South African telecoms companies at this stage is that the overall market is now largely mature as data revenue growth is largely offset by declines in traditional voice revenue.
“As a result they either have to grow by stealing market share from competitors or find new revenue streams. We believe it is less about diversification at this stage, but more about finding additional revenue streams to at least help cover growing cost bases.”
Takaendesa said telecoms companies were diversifying as the markets in which they operated were saturated.
He said Vodacom was now looking at identifying material non-core additional revenue streams for telecoms companies in the local market as shown by the failure of mobile money (M-Pesa) ventures.
“The growth targets now appear to be other mobile financial services, such as insurance and digital content such as TV streaming on mobile devices,” Takaendesa said.
“Telecoms have very wide distribution networks that they use to distribute airtime and handsets.
“It is these networks they are trying to leverage to generate new revenue streams.
“It is still early to tell if these potential revenue streams will become material given the failure of mobile money and Vodacom’s reasonable success in insurance is largely in mobile devices cover so far.
“MTN is also targeting growing its presence in digital services (financial and e-commerce), but primarily focusing on the rest of Africa and the Middle East where markets are not as developed as the South African market,” he said.
Culbert added: “All Vodacom insurance is fully underwritten by the wholly owned registered insurers within the Vodacom group. Vodacom insurance has rapidly become a substantial business that pays out an average of R1 million per day in claims.”
Vodacom shares fell 0.75 percent on Friday to R158.25.
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