Nicolette Dirk, finance writer, Justmoney.co.za
SA consumers gave the short-term insurance industry an overall satisfaction score of 78.8 out of 100 while the life insurance industry, granting them a score of 78.4 out of 100. Both industry scores are 1.7% higher than last year’s scores.
This is according to the South African Customer Satisfaction Index (SAcsi) that was released yesterday. The index measured the satisfaction of randomly selected customers of the top short-term and life insurers by market share and compared it against the results released a year ago.
The 2014 survey involved a sample of 2 665 customers in the life insurance industry, represented by Discovery Life, Liberty Life, Metropolitan, Momentum, Old Mutual and Sanlam Life and a category called ‘other’ which included smaller insurers.
SAcsi also surveyed 3 559 customers in the short-term insurance industry which included customers of Hollard, Mutual & Federal, OutSurance and Santam and a collection of smaller insurers.
In the life insurance industry, the 2014 findings revealed there was no differentiation among the measured companies since all the life insurers scored on par with the industry average. Sanlam Life was named as the industry leader last year, its score this year declined slightly by 1.9%.
Liberty Life and Discovery Life reported customer satisfaction scores that improved by 7.1% and 4.8% respectively, effectively bringing them on par with the industry when compared to their below par scores of 2013. Momentum (+1.0%) and Old Mutual (-0.3%) have maintained their industry par positions since last year with marginal changes in their scores.
Professor Adre Schreuder, founder and chair of SAcsi said that when viewing the life insurance industry results for this year, they indicate that no single industry player scored significantly higher or lower than the industry average. He concluded that this indicates that consumers do not differentiate among life insurers.
Andre Goethals, manager at Credit Life for Insurance Busters said the reason consumer’s satisfaction or dissatisfaction did not exceed the norm for life insurance was because of the frequency and type of claims.
“When it comes to short term insurance, people claim often and the type of claim is also usually very technical. Because claimants also often don’t understand the technical clauses it leaves room for higher dissatisfaction,” said Goethals.
When it comes to life insurance it is more cut and dry. People usually understand what they are signing up for and claim less frequently.
In the short term insurance industry, the 2014 index identified Santam as the industry leader again this year. Santam’s score showed marginal changes from last year and thus the company retained its title as the industry leader by scoring 2.2% above the industry average.
Last year’s joint leader, Mutual & Federal, reported a slightly lower score this year (-0.6%), bringing it on par with the industry average. OutSurance reported an increase of 3.6% in its satisfaction score from last year and is on par with this year’s industry average. Hollard, at 3.4% below industry par, has shown the most significant increase (+5.2%) when compared to last year’s score, which was 6.6% below industry par.
Last year’s joint leader, Mutual & Federal, reported a slightly lower score this year (-0.6%), bringing it on par with the industry average. OutSurance reported an increase of 3.6% in its satisfaction score from last year and is on par with this year’s industry average. Hollard, at 3.4% below industry par, has shown the most significant increase (+5.2%) when compared to last year’s score, which was 6.6% below industry par.
Direct versus broker interactions
Respondents were also asked whether they interacted directly with the insurers or indirectly via a broker or financial advisor. Results indicate no significant difference in overall customer satisfaction between the two groups of customers.
“Consumers dealing with intermediaries perceive their broker or adviser as a natural extension of the insurance brand, and, therefore, it remains vital for insurers to maintain good relationships with intermediaries who sell insurance products on their behalf,” said Schreuder.
But Goethals said a broker is very important to middle to high end earners who need personal assistance in not only dealing with a high income, but also a high level of debt.
“A low end earner usually does not have many assets and would only require the basic things from a product like life insurance and disability. Not much analysis is usually required and you will be able to get what you need by just contacting a call centre,” said Goethals.
Middle to high end earners would require a broker to do a financial plan for their portfolio and because there are so many assets to take into account, it cannot usually be done in a once-off consultation, through a call-centre.
“This will also require a lot of updating and revising. When circumstances change e.g the breadwinner no longer works or passes away, the debt left behind needs to be considered. The policy should therefore allow such a family to still maintain their standard of living.”