5. Methods of sale in South Africa

Question 1

List marketing channels for independent brokers

Answer 1

Self-employed
No one insurer
Commission paid to them

Question 2

List marketing channels for corporate brokers

Answer 2

Companies that are brokerages
Usually owned by banks
Normally favour some insurers and bank may have cross shareholdings
Commission paid to company&raquo_space; sales people

Question 3

List marketing channels for independent brokerages

Answer 3

Call centres
Sales agents sell products
Have intermediary contracts with mult insurers
Commission&raquo_space; brokerage&raquo_space; sales staff

Answer 4

Employed by insurer
Usually only sell for insurer
General agents: can sell form limited # if insurers due to agreements between them

Answer 5

Earn fix salary with performance bonuses

Answer 6

Media adverts, direct mail, tel calls
Usually no advice

Answer 7

Internet, USSD, Chatbots
Leads generated through aggregators&raquo_space; give offerings to client
Risk customer doesn’t fully understand product
Can mitigate using automated/algorithmic advice
FAIS accredit FSP must ensure automated advice is appropriately maintained

Answer 8

May lead to conflicts between channels
Experience differs between channels
Must establish clear marketing objectives to deal with problems

Answer 9

Flecibility in determining amount paid
Option: Lower commission&raquo_space; additional production and persistency bonuses not tied to sale
Co must ensure the princlpe of “equivalence of reward” upheld, i.e.
Total sales costs materially in accordance with max commission regulation applicable to commissioned brokers
Option: Fee based structures where client pays professional fee for adviser’s time
Option: combo of two

Answer 10

Commission payment period
Upfront
As-and-when
Trail commission