Why Capitec’s funeral cover strategy is beating legacy insurers - Tech Tides Africa

R102.95 versus R360.00. That stark price difference - for essentially the same R50,000 funeral cover product - isn't merely an aggressive pricing strategy. It represents a fundamentally different understanding of South African market realities.

- ANDILE MASUKU

A revealing LinkedIn post by Tim Treagus, the founder of WhatsApp-based market research platform Yazi, recently detailed how Capitec Bank has, in just six years, transformed its funeral cover business from scratch into a multi-billion rand powerhouse - now issuing one in every three new funeral policies in South Africa.

The striking revelation wasn't Capitec's scale (2.7 million active policies covering over 12 million lives), but rather how dramatically its pricing diverges from industry stalwart Avbob, which holds roughly the same number of policies but generates three times higher premium income. Worth noting, of course, is that Avbob's higher premiums include actual funeral services (transportation, burial preparations, etc.), while Capitec offers financial payout only - yet this product distinction doesn't fully explain the dramatic price gap.

This example surfaced just as Sona Mahendra, a venture builder turned founder currently concepting a healthcare venture in South Africa (and who has been steadily fuelling my growing interest in Indian market dynamics), shared a GrowthX podcast featuring Sajith Pai, a partner at Indian venture capital firm Blume Ventures.

Pai has built a solid reputation for insightful market analysis since joining the firm in 2018. His investment focus spans EdTech, HRTech, B2B Marketplaces, and consumer Internet business models - giving him a panoramic view of India's complex tech ecosystem.

Blume Ventures itself has distinguished itself in India's venture capital landscape through exceptional portfolio performance (with its inaugural fund achieving 5x gross returns), its support for deep-tech innovation, and perhaps most notably, its commitment to "insight open sourcing" - including the rare step of declassifying the 12-year performance report of its inaugural fund.