Johannesburg, Wednesday 9 April 2014: SA consumers gave the short-term insurance industry an overall satisfaction score of 78.8 out of 100. Consumers also rated their overall satisfaction with the life insurance industry, granting them a score of 78.4 out of 100. Both industry scores are 1.7% higher than last year’s scores, however, these slight increases in the overall scores are not statistically significant enough to report as increases in customer satisfaction.
This is according to the South African Customer Satisfaction Index (SAcsi) released today. The index measured the satisfaction of randomly selected customers of the top short-term and life insurers by market share and compared it against the results released a year ago.
The 2014 survey involved a sample of 2 665 customers in the life insurance industry, represented by Discovery Life, Liberty Life, Metropolitan, Momentum, Old Mutual and Sanlam Life and a category called ‘other’ which included smaller insurers. SAcsi also surveyed 3 559 customers in the short-term insurance industry which included customers of Hollard, Mutual & Federal, OutSurance and Santam and a collection of smaller insurers.
In the life insurance industry, the 2014 findings revealed a shift in the industry: there was no differentiation amongst the measured companies since all the life insurers scored on par with the industry average. Whereas Sanlam Life was named as the industry leader last year, its score this year declined slightly by 1.9%. Liberty Life and Discovery Life are challenging the industry, reporting customer satisfaction scores that improved by 7.1% and 4.8% respectively, effectively bringing them on par with the industry when compared to their below par scores of 2013. Momentum (+1.0%) and Old Mutual (-0.3%) have maintained their industry par positions since last year with marginal changes in their scores.
In the short term insurance industry, the 2014 index identified Santam as the industry leader again this year. Santam’s score showed marginal changes from last year and thus the company retained its title as the industry leader by scoring 2.2% above the industry average. Last year’s joint leader, Mutual & Federal, reported a slightly lower score this year (-0.6%), bringing it on par with the industry average. OutSurance reported an increase of 3.6% in its satisfaction score from last year and is on par with this year’s industry average. Hollard, at 3.4% below industry par, has shown the most significant increase (+5.2%) when compared to last year’s score, which was 6.6% below industry par.
“When viewing the life insurance industry results for this year in isolation, they indicate that no single industry player scored significantly higher or lower than the industry average. This indicates that consumers do not differentiate amongst life insurers,” says Prof. Adré Schreuder, founder and chair of the SAcsi. “However, when looking at the results in comparison to last year, it is clear that there have been many changes in the industry. Liberty Life improved its customer satisfaction by a substantial margin, as did Discovery Life. All of the companies are now on an even playing field, so differentiation in the industry is fair game for whichever company takes the initiative or maintains the improvement trends that we have seen for some in 2013,” he explains.
Commenting on the short term insurers, Prof. Schreuder said, “Santam’s customers have the highest expectations relative to expectations of the other brands measured in the industry, and Santam has managed to maintain its high satisfaction score by consistently meeting these high expectations. Hollard has shown good improvement, and with continued efforts, the company is poised to move out of its ‘below par’ ranking.”
Direct vs. broker interactions
Respondents were also asked whether they interacted directly with the insurers or indirectly via a broker or financial advisor. Results indicate no significant difference in overall customer satisfaction between the two groups of customers. “Consumers dealing with intermediaries perceive their broker or adviser as a natural extension of the insurance brand, and, therefore, it remains vital for insurers to maintain good relationships with intermediaries who sell insurance products on their behalf,” explained Prof. Schreuder.
The SAcsi is an independent national benchmark of customer satisfaction of the quality of products and services available to household consumers. Companies are selected for inclusion based on market share and the random sample includes a desired minimum of 270 respondents per company. Each month, customer satisfaction results are released for a different collection of specific industries.
SAcsi is the only South African company to hold a license with the American Customer Satisfaction Index (ACSI) and now forms part of a growing group of country license partners worldwide. “This partnership allows the SAcsi to benchmark South African companies against international equivalents,” explains Schreuder.
The international life insurance industry benchmark is set by the USA at 83 out of 100. SA scored second internationally, ahead of Indonesia, Korea and Singapore.
The international short-term insurance industry benchmark is set by the USA at 81 out of 100. SA tied second internationally with Indonesia, ahead of the UK, South Korea and Singapore.
The SAcsi delivers detailed industry benchmark reports to subscribing member companies to provide strategic guidance and insights for improving overall customer satisfaction. Executive summaries of the SAcsi scores for all measured companies are available on www.sacsi.co.za
The sample for both the life insurance and short-term insurance industries give a 2% error margin at a 90% confidence level.