An Oscars-level slap to short-term insurers

Hardly a day goes by without some or other survey result popping up in your inbox. The latest to flash across this writer’s Apple screen was like an Oscars-level slap aimed directly at South Africa’s short-term insurers. The opening paragraph of the 2021 Consulta Customer Satisfaction Index (SA-CSI) for Short-term Insurance media release criticised the industry for not doing enough to accommodate changing customer perceptions of value and quality. Slap jokes aside, and with apologies to Will Smith, the survey result points to an industry that is missing the mark in meeting customer expectations on a range of measures.

The pandemic goodwill has evaporated

According to Consulta, the 2021 survey result reflects an industry where competition between players remains fierce, but where only two insurers emerged on an industry par score for overall customer satisfaction. “It seems that any goodwill the industry built up in the initial stages of the pandemic in terms of payment holidays, premium discounts and restructuring of client portfolios are now moot,” commented Abigail Boikhutso, CEO of Consulta. “Consumers increasingly view insurance as a grudge purchase rather than an enabler and safety net, and more so in the stressed economy”. 

According to Boikhutso, consumers raised concerns over value for money and a lack of perceived quality or differentiation between competing insurer brands. In addition, customer loyalty was under constant threat due to significant increases in complaints incidences. The 2021 SA-CSI for Short-term Insurance polled more than 3600 customers during the second half of 2021. Readers should note, however, that only a handful of traditional and direct insurers were mentioned in the result, including Absa, Auto & General, Momentum, Nedbank, Old Mutual Insure, Standard Bank and Virseker. This writer was surprised that the likes of Hollard, OUTsurance and Miway and Santam were wholly absent given their substantial market shares in the domestic personal lines market. 

Exceeding service expectations, always

We asked two of the insurers that were rated in the study to comment on their perceptions of customer interactions, starting with whether short-term insurance policyholders were more critical and / or demanding post-pandemic. “If you are handing over your hard-earned cash for a service, that service expectation should be met or exceeded, always,” said Ricardo Coetzee, Head of Auto & General Insurance. “It has been this way pre-pandemic and during the pandemic, it is a constant and we have an ongoing and consistent focus on ensuring it for our customers and broker partners”. Both Auto & General and Virseker are part of the Telesure Holdings group of companies. 

Vickey Swanevelder, Executive Head for Claims and Client Experience at Momentum Insure, said that critical and /or demanding was too strong a wording. “Consumers are more conscious, post-Covid, as to how, where and on what they spend their money and the quality of products and services that they receive in return,” she said. “Car and home insurance have always been viewed as somewhat of a grudge purchase because there is no tangible product that one can admire or consume”. Of course, following an accident, an insurance policy must return in terms of the service delivery and reinstatement that the insured has paid for! 

Two standout insurers, for now

Momentum and Virseker were the only insurers to score above industry par on the overall customer satisfaction index, with scores of 81.5 and 82.5 respective, with the 2021 SA-CSI concluding that no clear leader emerged from among the named insurance brands. “The playing field has been heavily slanted to price above all other measures, making this a very challenging space to play in,” opined Boikhutso. “Legacy, brand sentimentality and track record appear secondary in a heavily-contested space where there is little growth; aspects such as quality of service, product benefits, value and price will increasingly become the measures that customers base their decisions on as they perceive there to be minimal real differentiation in this space”. 

Her view supports the commoditisation trend that has played out in both the microinsurance and personal lines segments over time. This writer wondered whether short-term insurers were concerned about the industry reflecting poorly in a consumer survey of this type? “Not all insurers featured poorly,” said Swanevelder. “We have shown improvement for three consecutive years, culminating in outstanding results for 2021”. The survey result does, however, press insurers to think more critically about how their product is distributed, whether via brokers or direct. Momentum Insure said that while brokers still played a pivotal role in the brand’s success, a large percentage of its client base was interacting with the brand directly. 

Switching to cut monthly premiums

Another key observation is that short-term insureds can easily switch between one insurer and the next. “This places the industry under tremendous pressure to retain clients, especially by delivering exceptional customer service, and I have no doubt that we will see improved industry results in the years to come,” she said. 

Covid-19 has had a material impact on service delivery and insurers faced tremendous challenges to mobilise staff to work from home over much of 2020. “Insurers were also hit hard by their own staff falling victim to the virus which had a significant impact on staff capacity, not to mention the influx of claim volumes during the abnormal rainy season we have experienced since September / October 2021,” commented Swanevelder. 

Coetzee noted that all customer feedback, whether good or bad, was welcomed as a driver of continuous improvement. “It must, however, be noted that if a survey is based on a small sample, it is not necessarily an accurate representation of an entire industry,” he said. His point was well made given the number of prominent brands that were absent from the survey. 

Surveys such as the SA-CSI for Short-term Insurance will remain an important tool to determine whether local financial services brands are on the right track. “The survey provides us with a holistic view of our strengths and our weaknesses and give us the opportunity to focus on the elements in our service delivery that clients deem important now and in the future,” said Swanevelder, before offering up some survey basics for her peers. 

An introduction to client satisfaction

Overall client satisfaction surveys should be grounded on client feedback in three areas. First, transactional surveys that reflect the client’s satisfaction at the point of interaction with the product provider. Second, traditional surveys, where client feedback is segmented in terms of channel and product, providing greater insights into the client experience. And third, national and international benchmark surveys such as the SA-CSI, which is more strategic in nature. “Ultimately, a survey will only hold value if you actively use the feedback that you receive to improve client experiences,” she concluded. 

Writer’s thoughts:
I hope you enjoyed today’s headline Will Smith slap joke; be sure to let us know if you felt it inappropriate. On a more serious note, were you surprised that short-term insurers featured so poorly in the 2021 SA-CSI survey? Or is this simply the inevitable consequence of most traditional insureds interacting with short-term brokers rather than an insurance brand? Please comment below, interact with us on Twitter at @fanews_online or email us your thoughts [email protected].

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