South Africans are surprisingly happy with their life insurers

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JEREMY MAGGS: A new study by the University of Pretoria paints a positive picture of South Africa’s life insurance industry, with an overall customer satisfaction score of 74.1 out of 100. That’s well ahead of global averages, and just 6.6% of policyholders reporting issues. The sector, it seems to me, seems to be performing strongly, quick claims handling, capable staff, strong digital tools are standing out.

But beyond the numbers, how well does the industry truly serve its consumers when life throws up serious challenges? So let’s take a closer look at this research and what it really tells us. Professor Adré Schreuder is with us, head of the industry chair in customer experience at the University of Pretoria. Prof, a very warm welcome. So, let’s start at a high level, if we can. What do you think is behind the strong satisfaction scores in the index?

ADRÉ SCHREUDER: Well, the index is a new index that we’re trying to actually understand the role of customer experience towards customer satisfaction. So the degree to which you, when you engage with your provider, when you call your life insurance company, when you claim, when you take out a policy. It’s all those engagements in various forms through different channels that have a certain experience.

As a result of that experience, there’s a cognitive, let’s call it a result, that would leave you satisfied or not satisfied. That’s pretty much what drives this.

I think the nature of life insurance, compared to, for instance, banking, you wouldn’t necessarily engage with your life insurance company on a monthly basis, definitely not on a daily basis, and that in itself makes a little bit of a difference.

So generally, things are good, or you hope that it’s good for the day that you do need the benefit of why you’ve actually got the life insurance is to look after your loved ones, and you’re not going to get the benefit of that. So it’s actually quite an unselfish-type product category, if you really think of it.

Whereas when you buy food, you buy food for your own consumption. But in this case, you’re buying food for someone else in a certain sense. That in itself, I think, drives the higher level of the customer experience index.

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JEREMY MAGGS: Prof, I think the key word that you used in that answer was maybe the word hope. I’m just wondering if a high score on paper is always a sign of real-world success in this industry.

ADRÉ SCHREUDER: Ja, very, very much so. If you look at the index, one of the things that we do highlight is the problems experienced, is when things go wrong, and that’s usually at a time when you don’t really want things to go wrong. That is, it could be in the process when you need to change a debit order, or you need to change address, or you need to change beneficiaries, the normal things in terms of the upkeep and the maintenance of your policy.

But when things go wrong at the claims stage, it’s not you, it is someone else, and that in itself then lends an added complexity to this.

For instance, we see 7% on average of customers reporting problems experienced. Now, 7% doesn’t sound much. But if you take 7% of all life policyholders in South Africa, it is a substantial amount of people who actually have a problem.

Then add to that, 53% are completely resolved. Now that is a good figure, and I think that drives the overall index to a higher level. But the inverse of that is 19% of that are completely unresolved. That’s, as they say, the devil lies in that detail.

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JEREMY MAGGS: So let’s look at that 6.6% or 7% of people reporting issues. But that number, I think, could also maybe miss those who either disengaged, gave up, or maybe are just unaware of how to escalate a problem.

ADRÉ SCHREUDER: Ja, you’re absolutely right. In the index we’ve added, there’s quite a controversy currently in the measurement of customer satisfaction and customer experiences. A lot of people are supporters of the so-called Net Promoter Score that measures the likelihood to recommend. In terms of engagement, that still is always an intention, which we just said that keyword is hope.

So it’s almost like a promise. You hope and therefore you will or you will not. But then we also looked at the actual behaviour. So did you recommend? Did you change your policy? Did you close? Did you lapse the policy? Those are the actual behaviours. Loyalty is only as good as the behaviour that follows that. That is where we see the lack of engagement, it’s because they are disengaged, and they don’t actually respond to that.

We actually get people that say upwards of 30%, 40% in some cases have either a query or a worry or an uncertainty, but yet they don’t escalate that to an actual query or an enquiry. That is what you just referred to, is that lack of engagement. It’s because you will only complain when you think that there’s a high probability that something will be done about it.

JEREMY MAGGS: It’s interesting that the customers praise service delivery, and I think we’ve both referenced digital tools, but I think it’s fair to say that there is still a degree of hesitation or even confusion around life insurance products in South Africa, and sometimes the complexity.

ADRÉ SCHREUDER: Yes, absolutely. The fact that we measure this particular industry, we looked at the traditional life insurance companies and the accompanying investment part of that. When you talk life insurance, there’s usually also an investment, let’s call it retirement planning, added to that. That in itself, reality plays a role.

Now, yes, there are online tools, but how much of this complex product is still sold through a broker or a wealth adviser or someone who needs to advise you because the complexity is just so difficult for the normal person on the street to understand.

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JEREMY MAGGS: So have you discerned anything, then, about how consumers feel about actual or real value that they’re getting? I’m thinking of maybe fair premiums or meaningful benefits, or in many cases, maybe you just settle for what is available.

ADRÉ SCHREUDER: It is interesting that although the index came out at 74.1 for the industry as a whole, the numbers differ between the different providers that we measured. We had the five major brands measured in here, but it starts off with a component we call quality of experience, that is on a level of 80. Now that is even higher than the 74.

But in between that lies what we call value of the experience, so the degree to which you value your engagement, and that falls from 80 to 73. That is seven index points lower. That tells us that yes, it might be a good service, but is it valued?

I have to call again. I’ll have to tell my whole story again to another person. I can’t talk to the same agent again. Those are the types of things that we talk about, value. The social value, you read social media postings and people say this is the worst life insurance by far, because they had a negative experience. Then you ask yourself, am I at the right policy, the right brand? That’s what we’re referring to.

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JEREMY MAGGS: Just a quick one in conclusion, again back to the study itself. I think I heard you say you focus on the five biggest insurers. Is that really a complete view, or do you think that smaller or maybe even emerging providers would paint a very different picture about the industry?

ADRÉ SCHREUDER: You’re absolutely right. This is at the very beginning. Our index only saw its first measurement in the banking industry in 2024, and then life insurance was soon after that. It’s the second industry that we do. Based on previous experience in doing a similar benchmark, it takes time until we actually got enough subscribers to add that.

For instance, in banking, we initially had the five major banks. Now it’s expanded to nine banks. It includes the likes of TymeBank, Investec, RMB Private and so on. So I think what will follow after this round of our index is that we will add the digital life insurance providers and the newer kids on the block, and that will provide another angle that we currently don’t have with just the traditional five big brands.

JEREMY MAGGS: It will be interesting to see what score emerges from that. I am going to leave it there. Professor Adré Schreuder, thank you very much indeed head of the industry chair of customer experience at the University of Pretoria.

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