Here’s what South Africans will demand from their insurers in a post-Covid economy

South Africa’s major life insurers are generally meeting customer expectations, according to the latest South African Consumer Satisfaction Index (SAcsi) by Consulta.

Consulta noted that the life insurance industry, like most financial services, face a major disruption due to the Covid-19 pandemic, which has impacted customers significantly – to the point that usual value propositions may no longer be top of mind.

“For at least the medium term, South Africa faces a heavily constrained economy, high and growing unemployment and technological disruption, all impacting the financial services sector and how it engages with customers,” said Ineke Prinsloo, head of customer insights at Consulta.

“Customer mindsets, approaches to their financial planning products and providers are likely to undergo radical change in a post-Covid economy, as will all consumer discretionary spending.

“Brand loyalty will come under significant strain as customers scrutinise aspects such as perceived value for money, overall customer experience with their brands, and whether they trust their providers to pay out in their time of need.”

Prinsloo said that markets are about to enter unprecedented competition in a recycled and shrinking consumer pool that will demand focus by insurers on customer satisfaction if they are to keep churn rates in check.

“The bells and whistles of overly complex benefit designs and loyalty programmes will be moot in a post-Covid economy, where consumers will be scrutinising the underlying value for money in every policy and programme,” she said.

“Insurers are going to be challenged like never before to deliver real, tangible value and simple benefit designs and communication on an ongoing basis, and not only at the time of a life claim.”

Other points of disruption will be banks offering credit life insurance, together with traditional life insurance, which have an added advantage to demonstrate tangible value right now – particularly where customers are being advised to claim under the retrenchment benefits on these policies to assist with debt repayments during the pandemic crisis.

“Across all providers, those who fail to get a handle on complaints and resolution and who are not responsive to their customers, are likely to see a greater number of customers go the mercenary route to look for better options.

“Effective digital delivery, maintaining customer satisfaction and experience will be key for the effective delivery of service and support. Given how quickly and widely South African consumers have had to integrate digital technology into every facet of their personal and work lives, the delivery of insurance products and advice in future is in for a major shake-up,” Prinsloo said.

In the 2019 SAcsi for Life Insurance, Absa Life, FNB Life and Old Mutual all take leader positions, followed by Metropolitan and Sanlam while Discovery Life, Liberty and Momentum all come in below par on overall Customer Satisfaction scores.

“It is interesting to note that two of the three leader positions are held by banks – Absa Life and FNB Life – and not traditional life insurers,” Consulta said.

“Bancassurance – the process of selling insurance products through banking channels – is making inroads into the traditional insurer space.

“This warrants attention given the ability of banks to integrate life insurance into trusted and digitised banking systems as part of a more holistic financial services offering, as well as integrate insurance offerings into their customer rewards programmes – this is likely to become increasingly important when customer cashflow is under pressure.”

Consulta noted that a few takeaways are clear in the sector:

• Customers seek simplicity, the group said, looking for clear understanding of what they are singing up for, narrowing the chance for disappointment when they claim.

• In terms of complaints incidence and handling, Absa Life has the lowest complaint incidence (6.2) which is well below the industry par (10.6) and it also has an exceptionally high complaint resolution rate (70.6).

• All brands measured met or exceeded the expectations of customers, with the exception of Discovery and Momentum. These brands showed the biggest negative gaps particularly around the reliability of the offering – showing that customers experienced more problems than they expected to. Both these brands come in below par on Customer Expectations and Perceived Quality scores.

Read: South Africans don’t trust insurers to have their backs in time of need: Index