Shaking up the status quo
Launching King Price was the meeting of two key desires for entrepreneur Gideon Galloway: Creating an innovative new insurance model, and continuing to pursue his entrepreneurial dreams. It didn’t happen overnight though.
“I spent over ten years patiently saving, not buying the fancier car or house, and putting what I could into growing my businesses and fostering a start-up fund.”
By the time he launched King Price, Galloway had secured R20 million in his own funds, a testament to the power of perseverance and setting his sights on his ultimate goal.
So what makes King Price so different from its peers? It’s simple, premiums decrease month by month instead of increasing. For Galloway, this was the most important factor of his business model.
“The insurance industry is so used to being a grudge purchase, we’ve never questioned this. The average customer switches insurance providers after 42 months, almost always on price. Your car is depreciating, but your premiums increase. Our model allows your premiums to decrease as your vehicle depreciates. If we keep each client for at least another six months after we would have lost them, the business model works – and I’ve based it on a 36 month cycle.”
It’s a world first, and is backed by German reinsurer Munich RE, one of the largest in the world.
Making it work
Galloway faced a number of challenges. As a start-up (even with R20 million in hand), he was going to launch at a tenth of what it usually takes to get an insurance company off the ground. He needed an investor, a reinsurer and an FSB licence.
Unfortunately, the industry is such that each is almost impossible to get alone — it’s a balancing act of aligning all three players, each agreeing that if the other two come through, they are on board. The FSB did its due diligence and granted the licence, followed by the reinsurer and investors.
“From the beginning I needed private investors who shared my vision. The model wouldn’t work if we needed to keep shareholders happy. We’ll take a three year knock before we see any benefits because the profit model is based on client retention.”
Galloway met with a number of potential investors (over 40 to be exact), and even flew beyond SA’s borders, but the fit wasn’t right. And then he met Mertech Group founder and philanthropist, François van Niekerk. “ThinkTank did some branding work for Mertech, and I realised that as an investor François not only had the R100 million I was looking for, but he shares a similar philosophy to mine.
We’re changing an industry, and 60% of our profits go into a trust dedicated to uplifting South Africa.” The third investor to come on board was Nikon South Africa owner, Stefan van der Walt. After less than a year in operation, numerous funders have since approached the team to buy shares, but the three partners are keeping the status quo as is.
Keeping it lean
With a tenth of the start-up capital usually required for getting an insurance business up and running, Galloway got to work.
“I had already developed most of the IT with my own funds. I wanted a totally integrated system which I needed to build from scratch. The rest fell into place with the investment secured, and I started building the right team and devising a fun, eye-catching advertising campaign. We’re shaking up this industry, and we wanted our brand image to reflect that.”
Building a team
To make a lean business work, you need the best team, and Galloway started by employing Munich RE’s ex-financial director as his FD. This was quickly followed by some of the best general managers and sales consultants in the industry.
“It’s one thing hiring the best, it’s another keeping them. We keep our work environment fun and engaging, while focusing on the ultimate goal: Selling policies (23 000 to date, a figure Galloway is extremely proud of) and keeping clients. We have an extremely aggressive commission structure, and a strong focus on client follow-through and communication. If we want to be the best, we need to employ the best, and pay them well.”
- Player: Gideon Galloway
- Company: King Price
- Est: 2012
- X-Factor: A business model that has enabled its founder to launch at a fraction of the industry’s normal start-up cost.
- Contact: www.kingprice.co.za; +27 (0)12 001 0800