According to the SA Customer Satisfaction Index released today, customers of South Africa’s largest short-term insurers are marginally more satisfied than last year. The findings from this year show Santam achieving the sole leadership position and OutSurance dropping from a 2014 shared leadership position to an on par ranking.
Over 2 340 customers were surveyed to evaluate their satisfaction with short-term insurance. Data was collected between December 2015 and March 2016. Brands included were Santam, Mutual & Federal, OutSurance, Hollard and a category called “Other”.
The overall industry score rose 1.5 points to 77.9 out of 100. Santam emerged as industry leader at 80.0 and was named as the closest to ideal. Mutual & Federal scored on par with the industry at 78.9 and showed one of the biggest improvements since 2014. OutSurance fell from its leadership position to an on par score of 76.7. Hollard’s score is still below par at 71.8 along with the “other” category that was also rated below industry average.
Prof. Adré Schreuder, founder of SAcsi and CEO of Consulta, says that the link between expectations, perceived quality and perceived value is very important in this difficult economy. “It seems as if the emphasis that OutSurance placed on lower premiums by cutting out the intermediaries is no longer believed by customers, since there is a marked drop in expectations and perceived quality. Most telling is the significant drop in perceived value,” he says.
A big concern in this industry is the fact that perceived value is down in the three-year trend from 78.3 to 76.7, irrespective of a small recovery in value between 2014 to 2015. Perceived value is measured in two unique but deliberate ways: overall price given the quality and overall quality given the price. The industry leader, Santam, has been successful in positioning itself as a trusted insurance company when paying claims and as a result, perceived value has improved,” explains Prof. Schreuder. Mutual and Federal has shown significant improvement in this regard, increasing its score by four points. OutSurance, on the other hand has lost ground in the area of perceived value with a three year downward trend.
Prof. Schreuder explains that younger consumers tend to rate value differently from older customers. “Insurance companies offer additional benefits like loyalty programmes and benefits. We often advise these companies that their focus should remain on paying claims and that it is crucial to recognise the emotional trauma that their customers have been through. Customers are extremely sensitive at this time and often feel betrayed by a company to whom they have been paying premiums for years when it appears that the insurer may not pay the claim,” he says.
Customer loyalty as measured by the SAcsi is the result of two components: customer retention and price tolerance. As such, the customer loyalty score reflects the impact of price tolerance on customer retention. “Overall loyalty scores seem to have recovered from a low in 2014, but are still lower than the high of 2013. The only two companies that have secured substantially higher customer loyalty intentions this year were Mutual & Federal and Santam,” he says.
Complaints and complaints handling are areas that brands should consider because the short-term insurance industry is a low touch industry, meaning customers do not make contact with their providers on a regular basis. “Santam is setting a new industry benchmark in this regard by having only 7% of Santam customers with complaints, compared to the industry average of 10%. Mutual and Federal was rated highest in terms of complaint handling and Hollard was rated lowest despite having fewer customer complaints. Interestingly, OutSurance seems to have some challenges in this regard since they have almost double the number of complaints that Santam does.
“Most complaints are about product pricing and claims. This makes it difficult to rectify, because it means that customers generally won’t be happy unless the claims are approved or if the premiums are drastically reduced,” says Prof. Schreuder.
Net Promoter Scores (the likelihood that customers would recommend a particular brand) remained static at 33.22% overall, with Santam a clear leader at 44.7 % and OutSurance losing the most ground as its net promoter score fell by more than 20% since last year. The Net Promoter Score strongly correlates with the number of problems that occur and the way in which they are handled. Companies that have been able to reduce the number of complaints and improve handling have been able to maintain and improve the level of loyalty they achieved last year, whilst the opposite is true for those that have more complaints and a lower handling score.
Santam and Mutual & Federal compare very well with their international counterparts from the US, UK and Singapore, scoring among the best in the industry in those specific areas. OutSurance’s score places them in the middle of the combined pack, while Hollard rates towards the lower end of the market internationally.
When it comes to interacting with insurers, customers generally find insurer employees to be friendly with good soft skills, therefore leading to a good experience. Where this fails is when insurers do not keep their customers informed of changes and requirements, and when communication does not happen as readily as expected.
The SAcsi index gives companies detailed information to assist them in improving customer satisfaction. Each month, customer satisfaction results are released for specific industries.