Your clients (should) always laugh best
‘He who laughs last, laughs best’ is a fantastic 16th Century English idiom that could easily apply to adviser, client, insurer and regulator relationships in the context of today’s treating customers fairly (TCF) financial services environment. The idiom suggests that the person who seemed initially to draw advantage from a set of circumstances, he who laughs first, often ends up holding the short end of the stick… You will find examples of this idiom in action in all interactions in the financial services space, between adviser and client, adviser and insurer, client and insurer and each of these stakeholders and the regulator.
‘He who laughs last, laughs best’ is a fantastic 16th Century English idiom that could easily apply to adviser, client, insurer and regulator relationships in the context of today’s treating customers fairly (TCF) financial services environment. The idiom suggests that the person who seemed initially to draw advantage from a set of circumstances, he who laughs first, often ends up holding the short end of the stick… You will find examples of this idiom in action in all interactions in the financial services space, between adviser and client, adviser and insurer, client and insurer and each of these stakeholders and the regulator.
Turning that frown upside down…
A win-win is the optimal and preferred outcome, and one would hope that each party to an insurance or investment transaction would emerge in a ‘laughs best’ frame of mind, or at least smiling broadly. Unfortunately, the complex nature of the life and non-life insurance environments often leave one or other party feeling aggrieved. Sometimes an adviser takes exception to being slapped down by the FAIS Ombud and occasionally an insurer feels unhappy about being hoodwinked by a dishonest client; but most often, a client ends up scowling due to an insurer rejecting his or her claim or a product not performing as expected.
The ongoing evolution of South Africa’s financial services regulation to carry and enforce six TCF principles means that your clients have plenty of avenues for recourse following an advice or product failure. They can fight a claim rejection on multiple fronts, starting with the adviser or insurer’s internal complaints resolution division and escalating the matter to one of the advice- or insurer-specific consumer Ombudsman schemes. These include the Ombudsman for Long-term Insurance, Ombudsman for Short-term Insurance and aforementioned FAIS Ombud. In fact, many advisers lament that clients will knock on each of these doors, using the last mentioned institution as a catch-all when all other avenues fail…
Ranting and raving on social media platforms
There is, however, another place where consumers can tackle financial services providers (FSPs) nowadays, being the court of public opinion. They get to express their financial product experiences through consumer rating surveys and real-time rants or raves on social media. There are plenty examples of the latter, with the ‘not so long ago’ public outrage over a Momentum Life decision not to pay a large life claim resulting in a swift about turn. An example of the consumer survey route is the 2021 South African Customer Satisfaction Index for Life Insurance (SA-CSI), which ranks insurers based on how satisfied customers are with their life insurers over the last year. The survey, conducted by Consulta, polled around 2100 customers of the country’s largest life insurers.
The consumers who ‘laughed best’ during 2021, based on an overall customer satisfaction experience, bought their life insurance from Absa Life (84,9), Metropolitan (84,6) or FNB Life (83,9), with Standard Bank Life, Old Mutual, Sanlam and 1Life hot on their heels, all scoring 81.1 points. Discovery Life performed below par on this measure, but showed an improvement of more than four index points over its 2020 showing. “Absa Life made significant strides to the top leader position, improving its overall customer satisfaction score by more than seven index points,” wrote Consulta, before adding that bancassurance, or the distribution of insurance products through banking channels, was making inroads into the conventional life insurer space. It is ironic, but not unexpected, that the consuming public believes they are best served by the mostly-unadvised direct distribution channels.
An emphasis on customer satisfaction
We were surprised with how a brand like Discovery performed in this survey, and reached out to Riaan van Reenen, CEO of Discovery Life for comment. “We place huge importance on customer satisfaction and monitor such surveys, both in South Africa and globally,” he said, highlighting differences between the Consulta survey and the insurer’s internal polling.
Based on client feedback sought after each interaction with Discovery Life’s operational teams, the insurer recorded an overall average of 9.76 points out of 10 for its 2021 calendar year. “There are variances in our rankings across the different customer service surveys in this industry, which indicates that different methodologies are being used,” said Van Reenen. He added that the client retention was one of the best measures of customer satisfaction, with the insurer’s 2021 lapse rates at historically low levels.
Sanlam also welcomed external surveys of this type. “They allow us to benchmark our client experience against both our competitors and broader industry standards,” Sanlam said. “We do not only look at the SA-CSI survey results, but also at a broader set of surveys and benchmarks to assist our focus on continuous improvements. The feedback, in conjunction with our internal research, will be used to improve product, distribution and service offerings and performance”.
1Life took a similar position. “Customer surveys, like SA-CSI, are extremely valuable as they allow us to maintain areas of strength and to identify areas of improvement, said Rinaldo Mazonccini a Senior Manager at the insurer. “These insights help us improve the overall customer experience and, from a product perspective, ensure we are selling the right product, through the right channel to meet the needs of the customer”.
Getting to grips with 21st Century survey methodologies
We also had a quick word with Consulta to find out why certain popular life insurer brands did not show up in the rankings at all. Our short summary of their response: “It is complicated”. They offered the following technical explanation: “The international benchmark Consulta adheres to through its affiliation to ACSI … requires a minimum of four major market size holders to participate, and then a statistical relevant respondent sample highlighting a volunteered brand with a sample size of between 230 to 270 participants to meet the stringent SA-CSIs 90% confidence ratio with a 5% margin of error ratio”. They added that brands could make it onto the rankings as category leaders without market share “if policyholders raise the brand consistently throughout”.
And the complexity continues… The SA-CSI model uses a combination of subscriber-provided and independently-sourced, opted-in policyholders to determine market scores. “This method ensures independence and trust in the results as subscribers are not able to provide an overly-positive, curated policyholder respondent list; a number of quality checks are run on both provided and independently-sourced respondents to ensure a true and unbiased reflection of the reports industry scores,” they said. We appreciate that all surveys have to play out according to some or other methodology, but wondered how useful they were given complexity of the product environment and the vastly different product and consumer match-ups.
Seeking clarity, simplicity and transparency
Commenting on the latest survey, Abigail Boikhutso, CEO of Consulta said that consumers want simplicity, absolute clarity and transparency in terms of the conditions of cover. “Consumers have ditched overly-complex and expensive rewards programmes that require high effort levels, and have become increasingly intolerant of bad customer experiences and slow responses from service providers,” she said, adding that life insurance consumers “expected to receive the same level of responsiveness of digital service integration as they do from their banks…”
Fair enough; but how does one reconcile the extreme differences between an insurer’s measurement of its client experiences versus that made by the SA-CSI. Anecdotally, this writer believes that a brand like Discovery would fare far better than most of its peers in areas such as customer expectations and perceived quality; customer loyalty and perceived value, yet it lagged in the survey in question. Our best guess at the disconnect is that the survey probably considers a specific sub-set of the product universe, and our hunch is possibly borne out by the prominence of bancassurance in the survey.
Put your customers first, or…
Whatever the reason, it is clear all financial services providers need to put their customers first. “We constantly hear about brands talking about having a customer focus and being customer centric, but few have implemented it successfully,” concluded Boikhutso. “The past two years have clearly demonstrated that in an environment where insurance is largely commoditised and undifferentiated in terms of benefits and pricing, a razor-like commitment to outstanding customer service and centricity is fundamental, across every channel and touch point”.
Writer’s thoughts:
There are dozens of brand / consumer surveys that flood our mainstream media each year. Methodologies and results vary depending on the product category and consumer segments polled. Some cynics might dismiss survey results as marketing fluff; but there are those who take them very seriously. Are you or your clients influenced by consumer surveys in which your favourite product provider performs poorly? Please comment below, interact with us on Twitter at @fanews_online or email us your thoughts editor@fanews.co.za.
