Niche players give big short-term insurers a run for their money
Loyalty is on the decline as small outfits nail the more established brands, customer satisfaction survey finds
The SA short-term insurance industry has been disrupted by small niche players as a difficult economic climate erodes loyalty and consumers demand world class standards.
The 2018 SA Customer Satisfaction Index (SA-CSI) for short-term insurance, conducted by Consulta, has listed a relatively small niche player as the top brand with which customers are most satisfied.
Virseker, which caters to Afrikaans clients in their own language, has once again topped the list of SA short-term insurers as the brand that has the highest overall levels of customer satisfaction, according to the index.
This is the second consecutive year that, in overall customer satisfaction, Virseker has beaten off the likes of Santam, Old Mutual, Outsurance and Auto & General, while Hollard has made steady gains over the past three years, though not enough to be above par for the industry.
Discovery Insure, on the other hand, has seen a noticeable fall in customer satisfaction over the past two years, with a seven index point decline since 2017.
SA-CSI founder and chair Prof Adré Schreuder says the strongest predictors of satisfaction in the insurance industry is the degree to which customers feel that their cover provides peace of mind, a factor, he said, that boils down to trust.
“This is a significant factor when you consider that the nature of insurance is to protect your most valuable assets in your time of need, returning your financial stability after a mishap,” he says. “It is very important that customers understand exactly what they are covered for during the sales and annual review process as this is where their expectations are born. The best way to achieve this is to drive simplicity in communication, remove jargon and provide sound advice.”
Hollard on the up
Santam scored a close second to Virseker, with Outsurance, Old Mutual and Auto & General managing to be “on-par” with the industry standard. According to Consulta, Hollard is the only insurer that has improved its overall customer satisfaction score since 2017.
Consulta says Virseker “has nailed it in terms of understanding its target market, their needs and their value proposition filters into that”.
Santam, on the other hand, managed to maintain its reputation as a trusted brand because of “its sheer size and advice-driven business model”. In addition to being aware of the threat from leaner and more focused players, “it should guard against being perceived as the more expensive brand in the market”, Consulta warns.
Consulta also cautions against the rise of digital disruptors. “The insurance sector is being heavily tested with fierce competition among current players in a relatively low-growth market. The entrance of new insure-tech brands is also upending traditional insurance models, as well as developing new markets that have largely been ignored by traditional insurers.”
Keep it simple and focus on the customer
Schreuder says that the findings show insurers must remove the jargon, be clear and design their business around the needs of consumers. “When customers have a clear understanding of what they are signing up for, there is a much lower chance that they will be disappointed at claims stage.”
He says this year’s SA-CSI also highlights that a speedy claims process is a strong driver of customer satisfaction.
Failure to get to grips with these parameters will mean the difference between barely surviving and growing in a low-growth environment.
Other key findings of the SA-CSI:
- Across all brands, customer expectations are not being met consistently. The only two insurers to meet their customer’s expectations were Virseker and Old Mutual Insure.
- Virseker also leads the pack in terms of perceived value, followed again by Old Mutual Insure. Discovery Insure fared well below the industry norm. “Customers complained about the effort it takes to obtain the benefits promised as part of the cover,” Consulta says in its press release.
- Santam has a very low complaints incidence, which measures very well against global standards. However, they have a below-par score for their handling of complaints. Virseker, on the other hand, has more complaints but its ability to resolve the complaints is significantly higher than the global standard. Discovery had the highest incidence of complaints and one of the lowest scores for their handling of complaints.
- Santam is the brand customers are most likely to recommend, while Discovery is the insurer least likely to be recommended, with almost a third of its customers being active detractors of the brand.
- The degree to which customers feel they are being treated fairly by their insurer is highest again with Virseker, followed by Santam, Old Mutual Insure and Outsurance. These are all above the industry par. All the other brands scored below par.