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JEREMY MAGGS: A recent study from the University of Pretoria presents an encouraging outlook for South Africa’s life insurance industry, with an overall customer satisfaction score of 74.1 out of 100. This significantly outstrips global averages, with only 6.6% of policyholders reporting issues. The sector appears to thrive, underscored by efficient claims management, competent staff, and strong digital resources.
Yet, beyond these figures, how well does the industry assist its clients during challenging times? Let’s explore this research and its ramifications. Professor Adré Schreuder, the head of the industry chair in customer experience at the University of Pretoria, joins us. Welcome, Professor. To start broad, what factors do you think contribute to these impressive satisfaction scores?
ADRÉ SCHREUDER: The index is a new tool designed to examine how customer experience affects satisfaction. The interactions at various points—whether contacting your life insurance company, submitting a claim, or obtaining a policy—are vital in forming that experience.
This experience influences a cognitive assessment, determining whether you feel satisfied or dissatisfied, which is fundamentally what drives these ratings.
Given that life insurance is not something you deal with every day or even every month, it creates a distinct contrast when compared to banking.
Overall, the outlook is optimistic, or at least encouraging, for those days when you need your policy’s benefits to support your loved ones. Ultimately, it’s a rather altruistic category when you think about it.
In contrast, buying food is for your immediate consumption. Life insurance is primarily for the security of others, likely contributing to the higher customer experience index.
Read: SA life insurers now control R4.5trn in assets
JEREMY MAGGS: Professor, the term you mentioned—hope—could imply that high scores on paper may not always reflect true success in this field.
ADRÉ SCHREUDER: Correct. The index reveals problems that typically arise at inconvenient times. Issues frequently occur when trying to change details like a debit order, address, or beneficiaries—the regular upkeep of your policy.
If complications emerge during the claims process, it affects not just you but also another party, complicating the situation further.
For example, we observe an average of 7% of customers experiencing problems. Although this may seem small, it’s significant when viewed against all life policyholders in South Africa.
Moreover, 53% of these reported problems are resolved, positively influencing the overall index. Conversely, 19% remain unresolved—this is a crucial detail.
Listen/read: How does a life insurance company assess its value?
JEREMY MAGGS: Concerning the 6.6% or 7% reporting issues, it’s possible this figure overlooks those who disengaged, felt defeated, or are unsure how to raise concerns.
ADRÉ SCHREUDER: Exactly. Our index recognizes the ongoing discussion around measuring customer satisfaction and experiences. Many recommend the Net Promoter Score, which measures the likelihood of recommendation. This remains an intention—the ‘hope’ we mentioned.
We also investigated actual behaviors—did they recommend? Did they change policies or allow a policy to lapse? Loyalty is reflected in these actions, showcasing a disengagement among those feeling powerless.
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Surveys indicate that 30% to 40% of customers may have questions or concerns but don’t pursue them—highlighting the engagement gap. Complaints often arise only when individuals believe there is a genuine chance of resolution.
JEREMY MAGGS: It’s interesting to see that while customers praise service delivery, there remains reluctance or confusion around South Africa’s life insurance products due to their complexity.
ADRÉ SCHREUDER: Absolutely. Our metrics focus on traditional life insurance companies, along with their investment components. Life insurance frequently encompasses an investment or retirement planning aspect, complicating the landscape for the average consumer.
Despite the availability of digital tools, many intricate products still depend on brokers or financial advisors, as comprehending them can be quite daunting for a layperson.
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JEREMY MAGGS: What insights have you gathered about how consumers perceive the true value they receive—whether through fair premiums or meaningful benefits, or perhaps just settling for what’s available?
ADRÉ SCHREUDER: Interestingly, while the industry’s overall index is 74.1, satisfaction levels vary among different providers. We examined five significant brands, starting with an aspect we categorize as quality of experience, achieving a commendable score of 80, surpassing the total score.
However, the perceived value of this experience drops from 80 to 73, indicating that while service delivery may be satisfactory, its perceived value trails behind.
Frustrations arise, such as needing to repeat information to various agents, prompting customers to reconsider whether they are with the right policy or brand, as discussed in many social media conversations.
Read: Insurers disburse billions in death claims
JEREMY MAGGS: Finally, could you share your thoughts on focusing this study on the five largest insurers? Does this provide a complete perspective, or could smaller, emerging providers offer a different view?
ADRÉ SCHREUDER: You make a valid observation. This is just the beginning. Our index commenced with measurements in the banking sector in 2024 and is now branching out to include life insurance as a second industry. Historical benchmarks suggest that its scope will expand gradually.
Initially, we assessed five major banks, which now encompasses nine, including players like TymeBank and Investec. Future iterations of our index will include digital life insurance providers and new entrants, enhancing our understanding beyond traditional major brands.
JEREMY MAGGS: It will certainly be fascinating to see what insights emerge from these additional viewpoints. Thank you, Professor Adré Schreuder, for your invaluable insights as the head of the industry chair of customer experience at the University of Pretoria.
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