The latest South African Customer Satisfaction Index for Short-Term Insurance – the most comprehensive survey of customer satisfaction in the country – has provided us with a number of important industry insights, namely:

• The overall level of customer satisfaction in short-term insurance companies is on the decline, and;
• Smaller, niche insurers are giving the larger, traditional short-term players a real run for their money.

The index, compiled by research firm Consulta, links customer expectations, perceived quality and perceived value to customer satisfaction to create the SAcsi score, which is then linked to customer complaints, resolved complaints and customer loyalty intentions in order to determine which short-term insurers are best and which have dropped the ball.

Let’s take a look at the latest findings.

The latest SAcsi for Short-Term Insurance has revealed Virseker to be the best short-term insurer in South Africa, boasting the most satisfied clients for the second consecutive year. 

Virseker, a relatively small niche player catering predominantly to Afrikaans-speaking customers, beat SA’s traditional insurance giants to the top spot with an overall satisfaction score of 80.7 – well above the industry standard 76.6.

This was followed by Santam (79.2) in second place, also exceeding the industry standard. Rounding up the top five were OUTsurance (78.0), Old Mutual Insure (77.5) and Auto & General (74.8) – all of which were considered on par.

Santam, OUTsurance and Old Mutual Insure have all remained relatively static in their scores over previous years. Hollard, despite facing a tough market and challenging operating conditions, has shown consistent improvement over the last three years, and is the only short-term insurer to improve upon its last SAcsi score. Discovery, however, has shown a notable decline in customer satisfaction.

South Africans know that short-term insurance is a product that they’re very likely to need at one point or another, and therefore expectations are prone to be very, very high. Unfortunately, these expectations are not being consistently met across all brands.

When customers experience more problems with an insurer than expected, it decreases their perceptions of reliability and quality in that brand. Likewise, when customers don’t receive quality service, or a quality product, or when the effort required to obtain the benefits promised as part of their cover becomes too great, it decreases their perceptions of value in that brand. 

When the customer isn’t receiving the quality, reliability, value or level of ease that they’re paying for, they’re far more likely to move their cover to an insurer that will better meet their expectations.  

Brand loyalty is on the rapid decline, mostly due to a lower price tolerance, with customers unwilling to pay more for what they’re currently receiving. 

This is further evidenced in the nature of the complaints received by insurers, where customers were shown to complain most often about the cost of their cover (18% of all complaints). This was followed by claims handling (14%), terms of cover (11%), response time (9%) and feedback (9%).

Discovery suffered the highest amount of complaints – more than double the global standard – and had one of the poorest complaints-handling scores. These kinds of results tend to raise red flags with consumers.

Virseker and Santam performed relatively well at opposite ends of that spectrum. Santam received very few complaints, but the handling of these complaints was shown to be sub-par. Virseker received a relatively high amount of complaints, but the handling and resolution of these complaints was shown to be very good – far better than the global standard.  

Insurers need to ask themselves whether or not they treat their customers fairly, and with respect. Have they cultivated an open relationship with their customers? Are their products and services transparent? Are those products and services easy to understand, do they deliver as expected, and do they sufficiently address the needs of the customer? Do they offer advice that is suitable to the circumstances of the customer? Have they made is easy for the customer to claim, access their benefits, complain about problems or change providers if they so desire?

Insurers need to ask these questions, because the modern consumer certainly does.

In a low-growth market, where customer expectations remain high by global standards, smaller, newer insure-tech brands have, by-and-large, been able to upend traditional insurance models, while simultaneously developing new markets that have gone mostly ignored by traditional insurers. 

In doing so, these smaller insurers have created far fiercer competition than ever before, and the industry giants are beginning to feel a tremendous amount of pressure.

Virseker, for example, has not only performed well in terms of overall customer satisfaction, but has also proven to understand its target market, their needs, and how they determine value.

Bigger insurers have generally managed to maintain their positions due to their sheer size and brand recognisability, but would be foolish to ignore the innovation, focus, value and quality being provided by smaller, niche players, who have broken away from the stale, conservative business models of old to build a business model around the servicing of the client’s interests, instead.

Customers need to be treated like individuals, and not just a policy number.  

At the end of the day, a client only wants a handful of very reasonable things from an insurer. 

Affordability, simplicity, cover that provides peace of mind, strong communication, clarity, and a provider that keeps its promises.

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