At the start of 2010 we raised the question “Would 2010 be the year for car insurance in South Africa?” We focused on the low percentage of insured cars in South Africa, the crime statistics and the need to have more car insured on our roads.
We expect that there is huge opportunity for growth in the Car Insurance market – and recent data revealed on financial websites such as ITWeb and Moneyweb supports this argument.
What is needed for an increase in Car insurance sales online?
I believe that an increase in car insurance purchases requires:
- Greater internet access
- Enhanced consumer participation
- Increased product offering
- Online and other marketing of these products
I believe it is necessary to discuss this – and especially the 2 top requirements in more detail.
Greater Internet Access
To do business online – you need to be online!
World Wide Worx recently said the number of South Africans with access to the Internet had grown 15%, to 5.3 million users, in 2009, and it expects a similar growth rate for 2010. Almost 11 million South Africans are expected to be online by 2015.
Wireless broadband has leapfrogged ADSL, growing almost three times as fast as fixed-line broadband, said World Wide Worx MD Arthur Goldstuck at a media briefing in Sandton.
“The good news is that we will continue to see strong growth in 2010, and we should reach the six million mark by the end of the year,” said Goldstuck.
Enhanced Consumer Participation
Being online does not mean that you purchase online. With Consumer Participation we would like to refer to whether those who are online are comfortable with making online purchases. These consumers might have been hesitant at first with the technology or might have had security concerns, but are now comfortable in making purchases via the internet…
This online shopping is expected to gather momentum as more South Africans log onto the Internet. A survey released by global credit card company MasterCard shows 77% of South Africans, who have Internet access, shop online.
Anthony West, MasterCard senior VP and GM of Africa, was quoted on ITWeb as saying that the trend towards online shopping is growing. Although this year’s figure is slightly down on last year, the company recorded growth in 2009, compared with 2008.
West said there have been concerns over security, a perception that users need a credit card to shop online, and consumers wanting to “touch and feel” what they buy. However, he says, there is a growing trend towards buying big ticket items, such as furniture, online.
MasterCard expects online shoppers to grow in line with the expected growth of Internet users.
Why do more consumers shop online?
MasterCard believes that consumers are attracted by the minimum hassle of shopping online when compared to the queues at normal shops, as well as the lower prices that can be found on the Web.
Interesting data from this survey includes:
- 83% of South African online shoppers are satisfied with their overall online shopping experience.
- 72% of active online shoppers intend to make an online purchase in the next six months.
- As online shoppers become more savvy and are increasingly satisfied with their online shopping experience, they are purchasing not just lifestyle items, such as airline tickets, online games and music downloads, but also basic necessities, including home appliances and groceries.
Conclusion
These are only a few of the indicators that could lead to an increase in Car Insurance purchases. “A sustained growth in internet penetration is a key factor that will positively influence the economy of South Africa”, Reshaad Sha, senior manager for Cisco Internet Business Solutions Group was quoted as saying in a statement.
We believe that the greater internet access available to South Africans and the better and more comfortable consumer experience by users will have a positive impact on the car insurance industry!!