The best and worst short-term insurers in South Africa, according to clients
South African consumers are increasingly critical of the short-term insurance industry, says Consulta, commenting on the findings of the latest South African Customer Satisfaction Index (SAcsi) for the industry.
According to the latest results of the group’s survey, the loyalty of insurers’ customers is declining and companies are struggling to articulate their customer value proposition and to differentiate themselves on all the cross-cutting functionalities of their service offers.
Most customers are incredibly sensitive to service delivery, quality, value and price, Consulta said, and very few players, if any, emerged in a better position in this regard after two years of pandemic.
“The (short-term insurance) industry collectively faces serious challenges in changing customer perceptions of value and quality and meeting increasingly high customer expectations,” the group said.
The latest SAcsi for short-term insurance (2021) shows an industry where competition between players is fierce and where only two insurers have emerged on a score equal to that of the industry for overall customer satisfaction, all the others showing below average performance in customer satisfaction issues.
There is no leader in overall customer satisfaction among all participating insurers.
Although the index differentiates between direct and intermediated insurance models, it is also important to note that all short-term insurers compete for the same customers, regardless of their distribution models. The SAcsi 2021 for short-term insurance surveyed just over 3,600 short-term insurer customers in the second half of 2021 across the following brands:
- Intermediated insurers: Absa, Auto & General, Momentum, Nedbank, Old Mutual Insure and Standard Bank.
- Direct insurers: Virseker.
Virseker (82.5) and Momentum (81.5) are the only two insurers tied in the industry (81.2) in the overall measure of customer satisfaction. No leader emerged. All other insurers are below industry average.
Virseker has shown marginal improvement over 2020, while Momentum has shown consistent improvement across the past three indices, up from a score of 77.8 in 2019, Consulta said.
Absa (77.3), Old Mutual Insure (77.1), Auto & General (74.8), Standard Bank (74.7) and Nedbank (67.9) are all below average and showing a decline previous scores of 2020, with the exception of Absa which enters the SAcsi for the first time in 2021.
|5||Auto and general||74.8|
“Nedbank is significantly below the industry average by more than 13 index points and has been on a consistent decline across the last three indices. Old Mutual Insure and Standard Bank are also posting declines of nearly 4 index points on 2020 scores, which will merit attention as both had trended higher for the past three indices,” Consulta said. .
“It certainly seems that any goodwill accumulated by the industry during the early stages of the pandemic in terms of payment holidays, premium rebates and the restructuring of client portfolios at a time when millions of South Africans found themselves in financial difficulty is now moot.”
Consumers increasingly view insurance as a grudge purchase rather than an enabler and safety net, all the more so in a struggling economy,” he said.
The general increase in customer complaints in the industry and a commensurate decline in complaint handling and resolution are concerning, said Abigail Boikhutso, CEO of Consulta. Short-term insurers will need to find and fill gaps in service and product delivery to customers, who show a growing propensity to do business elsewhere if they are unsatisfied,” she said.
Boikhutso said the playing field has been heavily geared towards price above all other metrics, which is a very difficult space to play.
“Legacy, brand sentimentality and track record prove secondary in a highly contested space where there is very little growth, not a declining customer base. Aspects such as service quality, product benefits, value and price will increasingly become the metrics on which customers base their decisions as they perceive there is minimal real differentiation coupled with poor experience. customer,” she said.
Complaints and Loyalty
In terms of resolving complaints, Momentum (61.5) and Virseker (60.7) have the highest scores, well above the industry average (55.2) – indicating a strong ability to resolve customer complaints.
All other insurers are at or below average, with Nedbank (35.8) having the lowest complaint resolution score.
This, coupled with a high complaints incidence score, means that a large portion of customer complaints are not satisfactorily resolved, which has a significant negative impact on their overall customer satisfaction and loyalty scores.
All insurers perform below average (73.5%) in loyalty, with Nedbank (54.3%) having the lowest loyalty score. Momentum (73.0%) and Virseker (72.8%) have the most loyal customers and are tied.
Industry-wide complaints centered on claims, product and cover details, premiums and costs, payments and debit orders, and response time.
Read: The best and worst life insurers in South Africa, according to clients