Discovery satisfaction drops below industry levels
The latest South African Customer Satisfaction Index (SAcsi) for life insurance, conducted by Consulta, reports that South African life insurance customers are the most satisfied with Metropolitan’s offering.
Metropolitan’s score of 82.6 places it well above the industry average of 79. The company has consistently improved its score over the past three years, having climbed from 81.4 in 2015 and 74 in 2014.
Old Mutual scored 80.3 (up 2.3 points), while Liberty scored 78.1 (up 4 points), Sanlam and Momentum were on par with the industry at 77.5 points each (up 2.6 and down 1.8 respectively).
Discovery was the only company to score below the industry average, with a score of 74 points (down 1 point since 2015 and still below its 2014 score of 74.8).
Now in its fifth year, the SAcsi Benchmark for Life Insurance offers impartial insights into the South African life insurance industry by blending a Customer Expectations Index, Perceived Quality Index and a Perceived Value Index to achieve an overall result out of 100. South Africa’s top six insurers are included in the industry index: Metropolitan, Discovery, Old Mutual, Liberty, Momentum and Sanlam. The sample included 2 460 customers who were randomly selected for inclusion in the 2016 survey.
“In this category, there isn’t a wide gap between the leaders and the laggards, compared to other industry benchmarks in the SAcsi. In other sectors such as short term insurance, medical insurance and retail banking, the difference in satisfaction is much more varied as customers deal with the services more frequently and would be more cognisant of poor customer service.,” says Consulta CEO, Professor Adré Schreuder.
Still, there has been a consistent improvement in the service quality of companies such as Metropolitan and Old Mutual, leading to their high scores. Discovery, on the other hand, fell short in both perceived quality and value, leading to it falling short on meeting demanding customer expectations.
“While Metropolitan customers prefer the in-branch, face-to-face experience and make enquiries more often, Discovery customers prefer to be served electronically online and via apps,” says Prof Schreuder. “Metropolitan customers believe that the insurer offers them the best product that meets their specific needs, and delivers on the promises made.”
The average customer loyalty across the industry recovered slightly with a score of 69.5, having dipped to 67.6 in 2015 from a high of 73.6 in 2014. The current economic climate has placed pressure on South African households, and therefore some insurers are predicting an increase in policy cancelations. However, those who remained have a low price-increase tolerance of 66.3, meaning they may cancel their policies should there be any increases in cost relative to value.
Metropolitan enjoyed the highest customer loyalty score of 72.9, an increase from 68.5 in 2015. Momentum’s loyalty score was in line with the industry at 69.6, while Old Mutual and Sanlam each scored 68, followed by Liberty with a score 67.7 and Discovery with a score of 64.5.
“It was interesting to see that while Metropolitan’s number of complaints is above the industry average, it also had the best complaint handling. They turned the tide of criticism into an opportunity to show customers that they care about them,” says Prof Schreuder.
An important metric for insurance providers is the Net Promoter Score (NPS), which measures the likelihood that customers will recommend a brand to their family and friends, becoming promoters, compared to customers who would actively discourage a relationship with an insurer, known as detractors.
Metropolitan achieved the highest NPS score of 46%, which beat the industry average by 8.6 points. Old Mutual scored 36%, Sanlam scored 33%, while Liberty and Momentum scored 30%. Discovery scored a NPS of 24%.
Metropolitan is the only brand to have consistently increased its NPS since 2014, having seen a massive jump from 34% in 2015.
Reflecting preparation for pending regulatory changes, life insurers were measured against the six principles of the Treating Customer Fairly (TCF) code, elements of which are included in the Twin Peaks legislation. Expected to come into effect mid-2017, TCF is a regulatory framework intended to improve market conduct in financial services. The score measures the perception of customer on how well financial services providers have incorporated TCF outcomes and a more customer centric approach into their value propositions.
For the past five years, the SAcsi has shown a significant statistical correlation in perceived fairness and customer satisfaction. Metropolitan was the highest performer in this metric, with a TCF score of 85.8 compared to an industry average score of 81.1, while Discovery yielded the lowest TCF score of 76.
“There is very little differentiation (at least not sustainable) in the type of life cover offered by the each of the life insurers. The difference lies in the quality of customer experience and the level of engagement each brand provides,” concludes Schreuder.
The full SAcsi for Life Insurance report and other SAcsi reports are available from Consulta.
For more information, contact:
Shaun Demmer at Tribeca Public Relations
firstname.lastname@example.org or 010 005 1000
About the South African Customer Satisfaction Index (SAcsi)
The SAcsi forms part of a global network of research groups, quality associations, and universities that have adopted the methodology of the American Customer Satisfaction Index (ACSI) via ACSI’s international licensing program called Global CSISM.
Developed by Prof Claes Fornell at the University of Michigan's Ross School of Business, the Index uses customer interviews as inputs to a multi-equation econometric model. The SAcsi methodology is distinguished from other measures of quality by four significant characteristics:
- ACSI uses a cause-and-effect model that measures satisfaction quantitatively as the result of survey-measured input of customer expectations, perceptions of quality, and perceptions of value (i.e., quality for cost).
- The ACSI model links satisfaction quantitatively with customer-survey-measured outcomes: complaints (a negative outcome) and loyalty (a positive outcome);
ACSI has a uniform, customer-based definition of quality: “customer satisfaction with the quality of goods and services consumed.”
ACSI treats satisfaction with quality as a cumulative experience, rather than a most recent transaction experience.
- Customer expectation refers to the total perceived benefits a customer expects from a company's product or service. If the actual experience customers have with a supermarket exceeds the expectation, they are typically satisfied.
- The index represents a weighted average of a range of facets related to customer satisfaction. Consulta, the independent research company that compiled the index, surveyed over 2 460 randomly selected customers of the six biggest life insurance companies along with their smaller competitors in South Africa – Discovery, Liberty, Metropolitan, Momentum, Old Mutual, Sanlam and others.
- The research is conducted independently, without sponsorship from any of the brands, and offers impartial insights into the industry. The 2016 SAcsi for Life Insurance benchmarks and blends a Customer Expectations Index, Perceived Quality Index and a Perceived Value Index to achieve an overall result out of 100.
- The SAcsi provides a weighted average of the various aspects of a customer’s experience with the brand, the degree to which the product or service has met, fallen short of, or exceeded their expectations, and how well it compares to the respondents’ ideal of what they anticipate their experience to be.
Consulta Research is a managing consultancy that improves its clients’ business performance through scientific consultation and research that leads to great customer engagement and proven global partnerships. Founded in 1998, the consultancy offers a diverse range of tools, including the South African Consumer Satisfaction Index (SAcsi), TISSE – The International Standard for Service Excellence, SCHEMA – your framework for Customer Centricity, Enterprise Feedback Management, and Customer Journey Mapping, all of which offer a platform to customise feedback according to each client’s needs.