Short-term insurers lose sight of customer experience as race to digital transformation intensifies
There is a fallacy across many businesses that digital
transformation and customer experience and satisfaction are interchangeable.
They are not. Technology will change and evolve, but the
fundamentals of being relevant and responsive to customer needs and wants on
every aspect of the customer journey remain steadfast. This is one of the key
take-outs from the 2019 South African Customer Satisfaction Index for
Short-term Insurance conducted by Consulta.
“Having all the best digital
platforms, tools and apps does not translate into customer loyalty or
satisfaction. If not managed correctly, digital transformation can create
customer frustration and dissonance when aspects such as complaints handling,
resolution and claims processing are ‘process driven’ rather than demonstrating
empathy and trust to your customers,” explains Ineke Prinsloo, Head of Customer
Insights at Consulta.
While many insurers are
embracing digital transformation and artificial intelligence to streamline
processes, communications and enhance insurance personalisation through data
analytics, customer experience (CX) comprises a much wider strategy of how
companies engage with their customers across every aspect of the relationship
and value chain.
“Human insight, engagement,
listening and empathy are critically important to customers and these drivers
come through in the latest index. The call for the insurance industry, and
greater financial services sector, is that digital transformation isn’t the
strategy or destination - it’s just one of many vehicles towards enhancing
customer experience. By focusing overtly on digital transformation to the
exclusion of other important touch points, insurers run the risk of losing sight
of the customer,” adds Ineke.
The 2019 SA-csi for short term
insurance provides highly scientific insights into the overall level of
satisfaction of customers of South Africa’s short-term insurers. The
latest index also differentiates between direct and intermediated
(broker-driven) insurers. However, when it comes to the competitive landscape
and consumer perspective, it is important to note that all short-term insurers
compete for the same customers regardless of their distribution models.
The 2019 SA-csi for short term insurance polled almost 4300 consumers of
short-term insurers during the second half of 2019 across the following brands:
Insurers: Auto and General, Discovery, Hollard, Momentum, Old
Mutual Insure, and Santam.
Insurers: MiWay, OUTsurance and Virseker.
Key take-outs of the 2019 SA-csi for short-term insurers
customer expectations: Only a handful of providers
meet and exceed customer expectations, while the biggest gap is found around
the reliability of the offering, in other words did the cover do what I
expected when things went wrong? Overall, intermediated insurance brands
performed better than direct insurers in meeting and exceeding customer
expectations – this is put down to the importance of the advice process and
helping customers understand exactly what they are covered for – and not
covered for – and managing customer expectations at inception of cover and not
at claims time.
perceived quality: Virseker, OUTsurance, Old
Mutual Insure and Santam lead the way on delivering a high-quality experience
for customers, with most others providing a high quality, but undifferentiated
experience. Apart from the brands already mentioned, Hollard’s consistent and
marked improvement especially in 2019 should be of significant concern to
competitors as the result of their strategic interventions start bearing fruit.
for money plays a massive role as the economy bites: The
perception of value for money is a very strong predictor of future usage and
company growth. On this measure Discovery Insure, Auto & General and Santam
score below the rest of the industry, with the quality of cover not living up
to customer expectations. The effort levels that customers experience in
their engagements with their insurers, claims processing and complaints
handling and resolution have a big impact on perceptions of value, with
customers being at risk of moving their cover when the hassle-factor becomes
too high. The best technology platforms, apps and loyalty points do not
substitute when customers question whether the trade-off between price and
value is worth it.
Africans still look to advice: Sentiment and key driver
analysis shows that customers are more likely to be satisfied with their
experience if they make use of an intermediated provider, as the broker makes
up for what direct suppliers lack in their ability to give advice. Customers
still favour having someone to help and guide them through the insurance
process, remove the hassle factor and provide professional advice, both at
inception of policy and especially at claims time. In this space, Old
Mutual Insure has done considerable work in creating a consistent experience
for customers whether they deal with their broker or insurer.
Satisfaction – Overall Index
•Direct Insurers: Virseker takes
leader position in the overall customer satisfaction index for the third
consecutive year with a score of 83.2, above the industry par of 80.0 and also
improving on its 2018 score of 80.7. OUTsurance comes in on par (81.5) while
MiWay (77.6) scores below par on overall customer satisfaction.
• Intermediated insurers: Old Mutual
Insure (81.2), Santam (79.7) and Hollard (79.1) are all on par.
& General (78.4), Momentum (77.8) and Discovery (76.2) all perform below
par on overall customer satisfaction.
Discovery managed to make up some lost ground following years of decline, it is
struggling on its trust measures with customers questioning whether they can
rely on the insurer to do what it promises in their time of need. Customers are
expressing their dissatisfaction on measures of trust and peace of mind, and
this is manifest across the business since it is unable to compartmentalize its
business units – what happens in one affects all the other lines of business.
while stable at a high level of customer satisfaction, remains stagnant, and
would do well to note the competitive threats, such as Old Mutual Insure,
OUTsurance and more recently Hollard, which shows strong and consistent
improvements on overall satisfaction, perceived value and perceived quality
measures, despite the tough market and operating conditions that face all
players in the industry.
Expectations and perceived quality
- Customer expectations across the board are high at an industry par of 83.8.
On this measure Santam, Virseker, Old Mutual Insure and OUTsurance have
customers with the highest expectation scores that are above industry par.
- However, when it comes to the perceived quality exceeding expectations, direct
insurers struggle to hit the mark, with most not meeting customer expectations.
intermediated insurers, Old Mutual Insure, Momentum, Hollard and Auto &
General all exceed expectations on perceived quality. In terms of
exceeding expectations, intermediated insurers perform better than direct
- Discovery Insure (-1.0) showed the biggest gaps between expectations and
perceived quality, particularly around the reliability of the offering.
Customers experienced more problems than they expected, which in turn drives
down the perceptions of reliability.
- Perceived value is a measure of the quality, relative to the price paid.
The perception of value for money is a very strong predictor of future
usage and company growth.
- Interestingly, only one direct insurer performs above industry par (79.8) on
this measure – Virseker is well ahead at 83.2 having improved from 80.3 in
2018. OUTsurance improved by 4 index points to 81.1 in the 2019 index but
remains on par.
intermediated insurers, Old Mutual Insure increased its score to 81.5 from 79.9
in 2018 and also shows an upward trajectory on perceived value score for the
last four years. Hollard has made a big comeback in 2019, improving by
almost 6 index points to 81.3 from 74.5 in 2018, and has consistently improved
over a three-year period.
the exception of Momentum, all other intermediated insurers have improved on
their perceived value scores compared with 2018.
Incidence and Resolution
terms of complaints incidence and handling the industry average of complaints
incidence is 11.1/100 and complaint handling is 51.4/100, which puts the
industry on par with international standards in terms of how well issues are addressed.
- OUTsurance has the lowest complaint incidence (9.5) of all direct insurers, and
an equally impressive complaint resolution score of 65.2.
- It is
notable that with the exception of OUTsurance, all direct insurers have high
complaint incidence scores, well above the industry par.
- Of the
intermediated insurers, all insurers are on par with complaint incidence.
- Momentum has a low complaint incidence (10.3) and a high complaint resolution
score of 59.7, followed by Hollard with a resolution score of 56.9.
- Discovery, Hollard, and Santam all show complaint incidence scores slightly
higher than the industry par.
the exception of Hollard and Momentum who track well above industry par on
complaint resolution, all intermediated insurers have shown complaint
resolution scores below par. Notably Discovery and Santam showed marked
decline in customer resolution compared with 2018 scores, all at an alarming
15+ point deficit below par.
- Virseker and OUTsurance have the most loyal customers of all direct insurers
and are ahead of the industry par of 71.6%. Both brands have made
considerable gains in customer loyalty scores compared with 2018.
OUTsurance has managed to maintain good scores on loyalty and overall
satisfaction despite going through a period of rapid growth – typically it is
very difficult to maintain growth without losing traction in these areas, which
is to their credit. Budget Insurance has the least loyal customers.
- Of the
intermediated insurers, Old Mutual Insure leads on customer loyalty followed by
Hollard and Santam, while Discovery has the least loyal customers.
intermediated insurers have improved their loyalty scores compared with 2018,
with Hollard making more than a 10-point improvement.
· In terms of the key drivers of customer
experience and sentiment analysis. Customers rate Peace of mind, Keeps promises,
Listens and Responds and Staff knowledge as the four most
important considerations when it comes to rating their insurers. It is
interesting to note that the top two drivers – peace of mind andkeeps promises –
are trust-driven and make up 40% of the total scores.
· On the
top four drivers for direct insurers, Virseker and OUTsurance lead on all four
intermediated insurers, Old Mutual Insure stands out as the leader on all four
top measures, followed by Hollard and Santam. Hollard’s strong recovery
has seen it overtake Santam on all four key drivers. Discovery score
lowest on the top four drivers.
Promoter Score measures the likelihood of a person recommending a brand. The
industry par score is 39.6%
- Of the
direct insurers, Virseker and OUTsurance have the highest Net Promoter Scores
(NPS) at 47.1% and 42.4% respectively.
intermediated insurers, Old Mutual Insure (50.2%) leads followed by Santam at
- Discovery (23.8%) comes in with the lowest NPS scores, although Discovery has
seen improvement from a low of 8.9% on 2018.
Customers Fairly (TCF)
degree to which customers feel they are being treated fairly by their insurer
is highest with Virseker (87.0) and Old Mutual Insure (85.7).
make-up of the overall TCF score looks at seven key aspects including:
- Fair treatment of customers
- Products and services that
address customer needs
- Transparent and easy to
- Advice that is suitable for
the customer’s circumstances
- Products and services
deliver as expected
- It is easy for customers to
claim, change provides, complain or consider other providers
- Customers are treated with
respect and there is an open relationship
Virseker and Old Mutual Insure are the only two insurers that lead above par on
all these measures.
“Trust and peace of mind
remain key drivers of customer satisfaction in the insurance sector, yet we are
still seeing a number of players dropping the ball on these fundamental
drivers. There is still a disjoin between customer expectations and
actual deliverables. What the 2019 SA-csi results however do clearly
indicate is that three key players are investing strongly in customer
experience across the insurance value chain - Old Mutual Insure, OUTsurance and
Hollard which made a powerful comeback after a tough few years,” adds Ineke.
needs to be addressed?
“It is very clear that
customers want simplicity and efficacy – not only in product design and cover
deliverables, but in engagement and communications with their insurers.
Overtly complex products and loyalty programmes lose favour when they
demand unnecessary effort to deal with. Customers also want a provider they
feel listens and responds to their individual needs and offers a customised
solution, not only in terms of the product, but in the manner that complaints
are handled and the channels which they are able to engage with. Finally,
‘digital transformation’ cannot replace your CX strategy. The transition
to digital cannot come at the expense of meaningful, quality human engagements.
All the tech and innovation in the world won’t make up for a lousy
customer experience anywhere in the insurance value chain. The insurers
who will make the most headway in the next months are those whose systems,
processes, culture and brand messaging all talk holistically to the customer’s
lived experience,” adds Ineke.
While this index was done
prior to the current Covid-19 pandemic and lockdown, it will be interesting to
see what the impact will be on customer satisfaction in the 2020 SA-csi.
“In business ‘usual’
circumstances, it is already challenging to manage all the drivers of customer
loyalty and satisfaction. The Covid-19 pandemic and lockdown are unexpected
black swan events, profoundly impacting how businesses conduct their operations
and how consumers experience them. Customer needs and expectations of brands
are already evolving, almost unrecognisably as the pandemic plays out. We
expect that the customer experience landscape in a post-Covid-19 economy will
be radically altered. Many of yesterday’s solutions will no longer apply.
Brands will be under tremendous pressure to re-imagine their CX strategies to
cater for an entirely evolved customer whose beliefs, emotions, needs and wants
have been fundamentally reshaped in surprising and unexpected ways,” adds
“How insurers respond to their
customers in terms of financial relief measures and support during the pandemic
will play out strongly in terms of customer satisfaction in future. Insurers
need to demonstrate through their actions, not their words, that they take
their customer’s financial constraints, changed risk profile, unique challenges
and expectations seriously. Insurers should also not lose sight of the fact
that many customers are both personal and business policy holders – their
experience in either their business or personal capacities will have a huge
impact on customer satisfaction and loyalty in future, not to mention influence
thousands of people who are impacted by their word of mouth, particularly
across social media platforms. In handling pandemic-related claims, while
insurers cannot be reasonably expected to pay claims for risks that have not
been priced or covered in policies, they also need to avoid any temptation to
rely on fine print and technicalities to reject claims. How this all unfolds in
the coming months will have a direct and material impact on future customer
satisfaction levels across all insurers, and consumer perceptions of the sector
at large,” concludes Ineke.
a strategic tool for gauging the competitiveness of individual firms and
predicting future profitability, an organisation’s customer satisfaction
performance, as measured by the SA-csi methodology, provides a predictive
indication of how well the firm will perform in terms of future revenue and
earnings growth. Supported by both the scientific and practitioner
community, the SA-csi is the first independent, comprehensive national customer
satisfaction index with international comparability in South Africa and has
collected data from more than 400 000 consumers since its inception in 2012.
The SA-csi 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 its Global CSISM program.