The latest South African Customer Satisfaction Index (SAcsi) for Short-Term Insurers, conducted by Consulta, reports that South African short-term insurance customers are the most satisfied with Santam’s offerings.
With an overall SAcsi score of 81.3, Santam is well above the industry average of 75.8. It is the only insurer to consistently improve its score over the past three years, from 77.3 in 2014 and 80.0 in 2015, when it overtook Outsurance to become the industry leader.
Outsurance scored 77.3 (up 0.6 points) and Mutual & Federal scored 77.7 (down 1.2 points), with Hollard performing below the rest of the industry with a score of 71.2, down from 71.8 in 2015. Auto & General debuted in this year’s SAcsi with a score of 76.0.
Now in its fifth year, the SAcsi Benchmark for Short-Term Insurers offers impartial insights into the South African short-term 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 five insurers are included in the industry index: Santam, Outsurance, Mutual & Federal, Hollard and Auto & General (and a combination of various other short-term providers). The sample included 2 939 customers who were randomly selected for inclusion in the 2016 survey.
“At the heart of it, customer satisfaction in short term insurance is driven by the provider’s ability and perceived willingness to meet the customer’s needs when a claim is made. Customers want insurance products that work, not gimmicks, and they are willing to pay more for a reliable, value-for-money offering,” says Consulta CEO, Professor Adré Schreuder.
“While start-up insurers might rely on lower prices and special promotions, Santam has established a reputation as a reliable insurance provider, having proven that it is transparent and delivers on its promises. Outsurance initially entered the market at a low-price point, however, they are on par with the industry score suggesting that they have not achieved the perceived value preposition.”
A recurring theme in this year’s survey was that customers place great value on their trust in a brand, the availability of service, communication and the ease of use. Should any of these things be lacking, the customer’s expectation slides further, and eventually the business faces closure, as happened with Saambou in the banking sector and Autopage in mobile telephony.
“A short-term insurer that promises something and doesn’t deliver will not sustain a solid customer base,” says Prof Schreuder. The Santam brand campaign is explicitly focused on payment of claims, the higher SAcsi score reflects company’s delivery on this promise.”
As one Santam customer commented in the survey, “Great experience, great service! No problems or hassles when I want to log a claim.”
“Customers are better informed about their rights and choices, and it has become much easier to change insurers than it is to change bank accounts or medical aid policies, for instance” explains Prof Schreuder.
Overall, customer loyalty to short-term insurers has been erratic over the past three years, after a low of 64.9% in 2014 it jumped to 71.5% the following year and fell again sharply to 66.8% in the latest 2016 benchmark.
However, in that same period, Santam enjoyed a significant increase in customer loyalty, from 64.3% in 2014 to 74.8% in 2016, the only provider measured that has been able to achieve this positive trend. Outsurance customer loyalty was at its peak in 2014 at 71.6%, and recovered in 2016 from a slight dip in 2015, climbing from 68.3% to 69.9%. Auto & General scored just below the industry average at 66.3%.
Ineke Prinsloo, Director at DàIL Consulting and industry expert adds, “While Outsurance and Santam customers may have complained about pricing, they’re generally happy with their choice as they realise the quality of service they receive is worth the cost.”
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 a short-term insurer, known as detractors.
Santam achieved the highest NPS score of 50%, which is more than double the industry average of 24.3% and is the only brand to increase its score this year. Mutual & Federal scored 26%, while Outsurance score of 24% is in line with the average. Auto & General’s NPS score of 19% is below the industry average, whereas Hollard is at 8%.
Reflecting preparation for pending regulatory changes, short-term 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 in May 2017, TCF is a regulatory framework intended to improve market conduct in financial services. The score measures how well financial services providers have incorporated TCF outcomes and a more customer centric approach into their brand culture.
For the past five years, the SAcsi has shown a significant statistical correlation between perceived fairness and customer satisfaction. Santam was the highest performer on this metric, with a perceived fairness score of 82.9 compared to an industry average score of 77.9.
“It is clear that customers value a short-term insurance provider that addresses their core needs and has a proven track record of delivering on its promises, rather than placing emphasis on the ancillary benefits that they can easily find elsewhere,” concludes Schreuder.