South Africa’s best and worst short-term insurers, according to customers

South African consumers are becoming increasingly critical of the short-term insurance industry, says Consulta, commenting on the findings from the latest South African Customer Satisfaction Index (SAcsi) for the sector.

According to the group’s latest survey findings, customer loyalty among insurers is on the decline and companies are struggling to articulate their customer value proposition and differentiate across all the cross-functionalities of their service offerings.

Most customers are incredibly sensitive to service delivery, quality, value, and price, Consulta said, and very few players, if any, have emerged in a better position in this regard after two years of the pandemic.

“The (short-term insurance) industry collectively has some serious challenges ahead to meet in changing customer perceptions of value and quality, and meeting increasingly higher customer expectations,” the group said.

The latest SAcsi for Short-term Insurance (2021) shows an industry where competition between players is fierce, and where only two insurers emerged on an industry par score for overall Customer Satisfaction, with all others performing below par in the Customer Satisfaction stakes.

There is no leader in Overall Customer Satisfaction across all participating insurers.

While the index differentiates between direct and intermediated insurance models, it is also important to note that all short-term insurers compete for the same customers regardless of their distribution models. The 2021 SAcsi for short term insurance polled just over 3,600 customers of short-term insurers during the second half of 2021 across the following brands:

  • Intermediated insurers: Absa, Auto & General, Momentum, Nedbank, Old Mutual Insure and Standard Bank.
  • Direct Insurers: Virseker.

Virseker (82.5) and Momentum (81.5) are the only two insurers on industry par (81.2) in the overall Customer Satisfaction measure. No leader emerged. All other insurers are below industry par.

Virseker showed a marginal improvement compared with 2020, while Momentum has shown consistent improvement over the last three indexes, from a score of 77.8 in 2019, Consulta said.

Absa (77.3), Old Mutual Insure (77.1), Auto & General (74.8), Standard Bank (74.7) and Nedbank (67.9) are all below par and show a decline in previous 2020 scores, with the exception of Absa which enters the SAcsi for the first time in 2021.

# Insurer Score
1 Virseker 82.5
2 Momentum 81.5
Industry Average 81.2
3 Absa 77.3
4 Old Mutual Insure 77.1
5 Auto & Genral 74.8
6 Standard Bank 74.7
7 Nedbank 67.9

“Nedbank is significantly below industry par by over 13 index points and showing a consistent decline over the last three indexes. Old Mutual Insure and Standard Bank also show declines of almost 4-index points on 2020 scores which will warrant attention as both had been on an upward trend for the last three indexes,” Consulta said.

“It certainly seems that any goodwill the industry built up in the initial stages of the pandemic in terms of payment holidays, premium discounts, and restructuring of client portfolios at a time when millions of South Africans found themselves in financial distress are now moot.”

Consumers increasingly view insurance as a grudge purchase rather than an enabler and safety net, more so in the stressed economy,” it said.

Of concern is the general increase in customer complaints across the industry and a commensurate decline in complaints handling and resolution, said Abigail Boikhutso, CEO of Consulta. Short-term insurers will need to find and address the service and product delivery shortfalls to customers, who show an increasing propensity to take their business elsewhere if left dissatisfied,” she said

Boikhutso said that the playing field has been heavily slanted to price above all other measures- which is a very challenging space to play in.

“Legacy, brand sentimentality and track record are proving secondary in a heavily contested space where there is very little growth, of not a declining customer base. Aspects such as quality of service, product benefits, value, and price will increasingly become the measures that customers base their decisions on as they perceive there to be minimal real differentiation coupled by a poor customer experience,” she said.

Complaints and loyalty

In terms of complaint resolution, Momentum (61.5) and Virseker (60.7) have the best scores, well above industry par (55.2) – which indicates a strong ability to resolve customer complaints.

All other insurers are either on or below par, with Nedbank (35.8) having the poorest complaint resolution score.

This, coupled with a high complaint incidence score, means that a large proportion of customer complaints are not satisfactorily resolved, which in turn has a significant negative impact on their overall customer satisfaction and loyalty scores.

All insurers perform below par (73.5%) on loyalty, with Nedbank (54.3%) having the lowest loyalty score. Momentum (73.0%) and Virseker (72.8%) have the most loyal customers and are on par.

Complaints across the industry revolved around claims, product and cover details, premiums and costs, payments and debit orders and response time.

Read: South Africa’s best and worst life insurers, according to customers

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