Shake up in customer satisfaction with life insurers
Wednesday, 18 May 2016: According to new data from Consulta, South African customers are marginally more satisfied with life insurance companies than last year (75.7). Over 2500 customers gave their providers an average satisfaction score of 77.3 out of 100, up 1.6 points from last year’s measure.
The South African Customer Satisfaction Index gauged customers of Metropolitan, Momentum, Old Mutual, Discovery, Liberty and Sanlam. In an interesting twist, Metropolitan jumped from a ranking that was below par last year to a leadership position this year. In contrast, Sanlam clearly had some customer challenges, moving from leadership position last year to below par in 2016.
Both Metropolitan and Momentum emerged as leaders, with scores of 81.1 and 79.3 respectively. Old Mutual and a category of “other” scored on par with the industry average at 78 and 77.8 respectively. Discovery (75), Sanlam (74.9) and Liberty (74.1) obtained below par satisfaction scores.
Prof. Adré Schreuder, founder of SAcsi and CEO of Consulta, says that the scores mirror life insurers’ ratings for expectation and perceived value – factors which are taken into account in assessing the overall customer satisfaction score. “The only company that lived up to its customers’ expectations in 2015 was Metropolitan. This is made more noteworthy by the fact that the three-year trend shows Metropolitan’s customer expectations increasing,” he explains.
Value plays an important role in customers’ overall perception of a brand. “This year’s perceived value scores are slightly higher. They tell us that while customers of Discovery and Liberty view their products in a positive light, they see them as expensive. In the area of perceived quality (what the customer perceives he actually gets for the price paid) Metropolitan scored highest in terms of reliability, whereas Sanlam and Liberty scored below the industry average on this metric,” he says.
Loyalty in the life insurance industry is down, with the overall score six points lower than 2015. “Liberty’s loyalty score slumped significantly to 61.6% - its lowest score in the past three years. This coincides with the discontinuation of its loyalty programme on new products. It is interesting that Metropolitan scored above the average at 68% even though it does not aggressively market a standalone loyalty programme like its counterparts in the industry,” says Prof. Schreuder. He says that the benefits of loyalty schemes are subject to differences regarding short-term value derived from benefits like movie and gym discounts, as opposed to greater pay-out value over the longer term, for example. “Life insurance companies need to ensure that the value proposition they offer is properly communicated to their customers.”
A popular loyalty measure over and above what is measured in the SAcsi is the reputational Net Promoter Score. The Net Promoter Score for 2015 did not show any significant difference from 2014, but is still lower than the 2013 level of 35.6%. The life insurers that showed increases in their net promoter scores are both in the MMI group (Metropolitan & Momentum). Whilst most of the remaining brands measured showed declines, it is noteworthy that customers of smaller Insurance brands grouped under the category “Other” indicate a higher likelihood to recommend their respective brands.
Treating Customers Fairly (TCF) is a regulatory approach by the Financial Services Board that seeks to ensure the fair treatment of customers. Respect, addressing needs and clear information are the areas scored highest. The lowest scores overall were recorded for the ease with which products can be changed or complaints can be lodged by customers.
“Customer centricity is a focus in many financial services businesses, but perhaps companies need to be more critical of how their strategies are experienced by their customers. The bottom line is that customer-centricity is just a word unless customers experience simple, easy to use processes and they are treated as though the existing relationship with them is valued,” warns Prof. Schreuder.
He advises life insurers to drive customer centricity using the same approach that resulted in improvements in another key metric. “The SAcsi’s three year trend indicates that brands are getting fewer customer complaints and also that they have improved the handling of those complaints. Within the context of disappointing loyalty scores, the industry should replicate the actions used to reduce complaints and take this a step further by expanding these initiatives company-wide for improvements in customer management capabilities,” he says.
SAcsi is the only South African company to hold a license with the American Customer Satisfaction Index (ACSI). This partnership allows the SAcsi to benchmark South African companies against international equivalents.
Metropolitan, Momentum and Old Mutual compare very well with the best in the life insurance industries of the US, UK and Singapore, among others. Discovery, Sanlam and Liberty score well below their counterparts in the UK and US specifically.
About the research methodology
SAcsi is an independent index. As such, no specific sponsor or client commissioned this survey. SAcsi releases monthly satisfaction indices to provide a national economic indicator of customer satisfaction with the quality of products and services available to household consumers in South Africa. Subscribing members have access to the full results. Companies are selected for inclusion based on market share and the random sample includes a minimum of 212 respondents per company.
Summaries of the industry level reports are available on www.sacsi.co.za
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