[South Africa] Life Insurance Industry needs a market leader in customer satisfaction - SAcsi

The latest South African Customer Satisfaction Index (SAcsi) for Life Insurance Companies in 2017, conducted by Consulta, reveals that Metropolitan’s customers are still the most satisfied with their service. However, with 80.8 points, the company have lost its 2016 leadership position to be rated statistically on par with the industry – opening the spot for a market leader. 

While Metropolitan saw a decline of 1.8 points from 82.6 in 2016, Old Mutual – which has stayed on par for the last three years - had the second highest score of 80.6 (no significant change since 2016).

“This year will certainly be the year to watch Life Insurance providers as they race to differentiate themselves to gain the leadership position in customer satisfaction. Being on par with the industry standard doesn’t set market leaders apart,” says Consulta CEO, Professor Adré Schreuder.

Although Discovery Life’s SAcsi score improved the most in this round of measurement when it increased from 74.0 in 2016 to 76.3 in 2017, the company is still below par when compared to the industry. Liberty’s score dropped from 78.1 to 73.9 as it struggled to remain consistent and Momentum’s decline in customer satisfaction fell from 77.5 to 74.7 in the same period.

Now in its sixth year, the SAcsi for Life Insurance Companies offers impartial insights into the South African life insurance industry by measuring customers’ overall satisfaction out of 100. This satisfaction score is based on brands exceeding or falling short of customer expectations and assessing how well a brand is measured against respondents’ perception of the ideal life insurer. The Index also includes, among other measures, a Customer Expectations Index, a Perceived Quality Index and a Perceived Value Index. The 2017 sample included 2696 life insurance customers who were randomly selected to participate in the survey.

“The two lowest scorers, Momentum and Liberty, were adversely affected by changes in their leadership structures over the past year,” says Schreuder. “For companies to make customer satisfaction a priority, there needs to be consistency in strategic leadership as customer centricity is entrenched in business strategy. Transformation initiatives or subsequent internal programmes should not divert from the high levels of customer expectations in this industry.”

To better understand the preferred methods and styles of customer engagement, many top companies use journey mapping to recognise customers’ motivation and behaviours. Insurers would need to align people, process and organisational culture internally, as these are proven strategies to offset sudden leadership changes. 

“Metropolitan’s customers feel they are provided the best value for money from a product offering perspective, in terms of both a price and quality, which is not always easy to achieve,” says Schreuder. “Although Momentum and Metropolitan both fall under the MMI Holdings Group (since 2010), the same level of customer centricity or connection to customers cannot be seen across both brands in the Group.”

A popular metric for measuring a brand’s performance is the Net Promoter Score (NPS), which calculates the likelihood that customers will recommend a brand to their family and friends (promoters) compared to customers who would actively discourage a relationship with the brand (detractors).

Metropolitan achieved the highest NPS of 46.0%, which is 10.2 percentage points higher than the industry average of 35.8%. Old Mutual had the next highest NPS of 39.8%, followed by Sanlam on 31.8%. Liberty and Discovery were slightly behind, with scores of 29.5% and 26.9% respectively, while Momentum lagged with a NPS score of 13.0%.

“Customer affinity is an important metric to gauge, but it needs to be viewed in the context of business outcomes. The SAcsi includes questions on customer loyalty, including the likelihood to renewal and price sensitivity, to ensure that life insurance companies have a true reflection on customer base loyalty,” says Schreuder.

Liberty, Metropolitan and Sanlam had the highest complaint incidence respectively, but Metropolitan followed trend in its past performance in terms of handling complaints better. Liberty, on the other hand, performed below industry on complaint handling. Although Old Mutual had average complaint incidence, its handling of complaints was the most satisfactory of all providers.

The SAcsi research revealed that life insurers’ biggest challenges and complaints were related to the benefits and performance of solutions and products, pricing and communication - which are still on a basic level of customer expectations.

Life insurers are also measured against the Treating Customer Fairly (TCF) measure, an outcome-based regulatory and supervisory approach designed to ensure that specific, clearly articulated fairness outcomes for financial services consumers are delivered by regulated firms.

Metropolitan delivered the best TCF score, particularly in the area of treating customers with respect and creating an open, win-win relationship. However, the overall industry’s TCF score fell short in the area of making it easy for consumers to change providers, complain, claim or consider another brand.

“As is the case in all financial services measured in the SAcsi, there is a direct link between the perception of being treated fairly and overall customer satisfaction. The higher the satisfaction score, the more likely the provider is to be seen as fair in the eyes of the customer, and the life insurance industry reflected this very closely,” Schreuder adds.

The full SAcsi for Life Insurance report and other SAcsi reports are available from Consulta.