WHEN most of us think of medical insurance, getting ripped off by over-priced brokers creeps into mind.
But it is this perception that Senoelo Pheto and his partner Muziwakhe Kone are working hard to eradicate.
The two former employees of insurance group Discovery Holdings [JSE:DSY]
started Phekon Financial Services in 2006 after meeting at a conference.
Phekon's main focus is providing a brokerage service to the lower-income bracket market, starting with medical aid.
"I've always wanted to run my own business," says Pheto. "It was just a matter of waiting for the right time."
With 16 years of combined experience at the time, the pair decided to pitch their broker business idea to Discovery's top brass. Pheto then received enterprise development backing from the JSE-listed financial services giant, which provided incubation facilities to help their start-up.
He says the fact that not many blacks are involved in the insurance sector boosted their chances of getting the firm's backing.
"When we started, a lot of companies would not have opted for Phekon if it were not for the BEE (black economic empowerment) compliance points they would earn for enterprise development. We were fortunate to get the nod," Pheto explains.
"It is never easy to break into any sector because you need to build credibility to make people believe in your ability to deliver."
The major challenges of operating in financial services, Pheto says, are dealing with corrupt relationships. He says the reservation of business for so-called strategic partners is hindering the growth of small businesses in the sector.
"People are not given the same opportunities or a fair playing field. I don't want to get business just because I'm black; it should be based on our merit and whether we can deliver."
Phekon now has over 2 000 principal lives clients and has customers across local municipalities, including Pikitup. The company now services individuals, businesses and local government.
"Once you have your own company there is so much that you need to be aware of," he says, adding that you need to be an "all-in-one" type of entrepreneur.
"You no longer just have one set of responsibilities; now you have to handle human capital, be aware of labour law and do human resources duties. Then you have to take care of the operations and make sure the business is going to grow and be sustainable at the same time."
He says people take out medical insurance according to their needs and Phekon is there to cater to them.
"We don't have a lot of high profile clients because we have chosen to focus on the low-income earners. We want to provide better service structures, communicate with them and let them know that we are here for them as our clients. We always go an extra mile to add a personal touch."
Ready for the next level
A serious challenge, though, is educating people about their insurance benefits.
"A big issue for lower-income earners is illiteracy when it comes to understanding the terms and conditions of their medical cover, and this is where we seek to make a difference."
Phekon learns and interacts with various people at different levels, and having a positive impact on their lives is at the core of the business, says Pheto.
"One of our clients called me one morning to say thank you because she had just given birth and didn't have to endure going through queues at a public hospital," says Pheto.
"It's so rewarding when you get positive feedback from clients about your service, saying that they are satisfied."
On the role of incubation for entrepreneurs, Pheto says it is extremely important.
He adds that it shouldn't just be lip service by companies whose main aim is to garner BEE points for their scorecard.
"It is more than just about giving entrepreneurs money; there should also be sufficient knowledge, support and business training in order to ensure the business becomes sustainable," the 36-year-old says.
"It should come from the bottom of their hearts and they need to understand the role that entrepreneurship plays in South African people's lives. They too should want to make a difference in our communities."
From medical aid Phekon aims to start selling life products, short-term brokering and eventually all insurance products available in the market.
“We want you to be able to come to us and explain what sort of insurance you are looking for, and we go out of our way to find it for you. We are ready to go to the next level."