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Life insurers see decline in customer satisfaction

By Staff Writer
Just last month insurers Liberty and Momentum both boasted that the majority of their valid claims for 2014 were paid out to clients.

Liberty said that 95.7% of valid claims were upheld, which of course means that 4.3% of claims weren’t, while rival Momentum announced that it had repudiated only one percent of claims.
 
While it looks like some life insurers, for the most part, are paying claims customers are still not happy.

According to a report released by the South African Customer Satisfaction Index (SAcsi), on 1 April, consumer satisfaction with life insurers in South Africa has declined for the second year in a row.
 
Professor Adré Schreuder, founder of SAcsi and CEO of Consulta Research, said that one of the contributing factors to the decline in the customer satisfaction score for some of the life insurers may be due to price.

“Of course price sensitivity plays a role and the life insurance industry is extremely price sensitive.”
 
For 2014, life companies were given an average score of 75.7 (out of 100) this time around, which according to SAcsi, this is a decline of 2.7 points from 2013.
 
The results
 
Measured companies SAcsi Score Point difference from industry average (75.7) Point change from previous year
Discovery Life 74.8 -0.9 -3.3
Liberty Life 76.7 1.0 -1.8
Metropolitan 74.0 -1.7 -2.4
Momentum 78.2 2.4 1.2
Old Mutual 77.5 1.8 -0.8
Sanlam Life 78.4 2.6 0.6
Other 73.7 -2.0 -5.4
 
Source: SAcsi
 
According to the results, only two of the life insurers improved from the 2013 SAcsi results.

Momentum Life showed the greatest improvement over the previous year’s results with an increase of 1.2 points, followed by Sanlam which had an increase of 0.6 points.
 
Schreuder noted that while both Discovery Life and Liberty Life experienced a decline in their scores, they also launched new communication and marketing campaigns, which may have contributed to the decline.
 
“Interestingly, both Discovery Life and Liberty Life have embarked on intensive communication and marketing campaigns. It is not unusual to see drops in satisfaction and customer loyalty following acquisition drives; the downward shift in their scores may be as a result of a lag between the brand promises made since last year, versus actual customer experiences. Put simply, brand promises drive up expectations among customers and these expectations need to be met,” he explained.
 
Bernardt Gerber, the industry manager for life insurance and short-term insurance on the SAcsi, added: “The moment a client experience declines in this sort of Index, theoretically you will start seeing financial implications later on or performance indicators in terms of customer loyalty and things like that.”

Christopher Smithard, client director of Insights Solutions at Consulta Research pointed out: “This particular industry is quite closely contested. No particular brand is really differentiating itself in a major way. That being said I wouldn’t say that people are dissatisfied with their providers in general. I think it is more a virtue of increasing customer expectations due to the fact that they are not receiving anything new/better/different from current providers. The fact that they cannot find a better solution/offering from a different provider probably compounds this issue too.
 
“In general customer complaints are low – only 8% of the industry lodged some form of complain with their insurer. If we look into what these complaints were about we find that many respondents indicated that their policy does not meet their specific needs, prices, as well as benefits associated with their policy.”
 
How does the index work?
 
Gerber said: “The index is conducted in order to gain a scientifically sound benchmark of how the various insurers match up against each other as well as against international standards. The research model is based on methodology used by the Acsi (American Customer Satisfaction Index), this benchmark is conducted across various countries and industries globally.”
 
The SAcsi measure looks at a variety of aspects of the customer experience. The sample for the Index is generated using the SAcsi in house customer panel. This is a database consisting of approximately 250 000 people who participate in research on a regular basis.
 
In addition, SAcsi has access to the various life insurance companies’ database with their clients’ contact details, and SAcsi would then survey customers from these lists.
 
Gerber noted: “We focus on actual client experiences relative to what they had expected when dealing with the brand. We look at multiple aspects including reliability of the provider, degree to which they met the customers’ need as well as the overall satisfaction of the customer. The measure also incorporates complaints and problems clients may have had.
 
“Furthermore, clients are asked to rate the insurer relative to the ideal provider and to indicate the likelihood that they would choose their insurer again in future. Perceived overall value is also incorporated in the overall satisfaction modelling.”
 
SAcsi does not look at complaints made to the Ombudsman for Long-term Insurance when conducting the research, but rather at complaints made directly to the insurance companies.
 
However, SAcsi is “involved in proprietary research with some of the insurers where these complaints are overlaid with other complaints areas such as ombudsman and FIAS (the Ombud for Financial Services Providers).”
 
The benefit to the customers
 
Gerber explained: “The SAcsi provides a customer view on their experiences with the various life insurers. Customers from each life insurer are asked to rate their own brand. The Index should help customers understand how the various life insurers are perceived by the general public. It could also serve as a validation of customers’ views on the various life insurers to see whether they have the same perceptions as the general public.”
 
According to Gerber, SAcsi results can assist customers in making informed decisions when choosing a financial institution to assist with their insurance needs.
 
“In the long run it also benefits them in the sense that the index contributes to informing companies (in this case Life Insurers) of the voice of their customers – companies that are serious about their customers will listen, understand their needs and in the end provide products, services and relationships that better meet the needs and expectations of customers,” added Gerber.
 
“Interestingly, not only is the SAcsi results relevant to customers, but also to investors.”

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