Other parts of this series:
Short-term insurers in South Africa can boost their gross written premiums substantially by deploying more digital technology. But they must improve their customer relations.
Short-term insurers in South Africa have a huge opportunity to expand their businesses by rolling out more digital products and services.
Greater deployment of digital technology, as I mentioned in my previous blog post, would enable the country’s short-term carriers to push up their gross written premiums by a whopping R115.2 billion in the next four years. To capitalize on this opportunity, however, they need to significantly improve their engagement with customers.
Our recent survey of 1,500 retail insurance customers across South Africa shows where short-term insurers need to up their game.
Many customers report that it’s difficult and inconvenient to engage with their insurers. Only 20 percent of the people we surveyed described their interactions with insurers as easy and convenient.
Short-term insurance customers want to use multiple channels to engage with their providers. Older customers still favour human interaction and contact by telephone but younger consumers want digital channels. Demand for digital interaction will continue to grow.
Insurers that establish digital ecosystem partnerships, with service providers from outside the insurance industry, will be able to better serve their customers and capitalize on new business opportunities. Furthermore, greater investment in highly-personalized digital services will substantially improve customer satisfaction and retention.
Insurers need to introduce business strategies and practices that will encourage their customers to trust them more. Lack of trust, which inhibits the sharing of personal data, could be a major stumbling block for insurers planning to expand their digital services.
Our research found that consumers are reluctant to share information with their insurers. As shown in the illustration below, only around a third of respondents are happy to share their contact details – and this is information already held by their insurers. They are even more reluctant to disclose more personal information such as their credit rating or details about their use of online social networks.
SA consumers’ willingness to share different types of data with their insurers
Reticence among consumers to part with personal information is often fuelled by their concerns about data security and the possible impact of such information on their premiums. They have greater confidence in the ability of banks and retailers to protect their data than insurers.
It’s essential for insurers to improve customer perceptions about their trustworthiness. Our research shows that if customers are confident their information will be secure and only be used ethically, they will share personal data with insurers in return for better products, services and rewards.
Insurers need to put data security and ethics at the heart of their digital strategies. New products and services must demonstrate that insurers take seriously their responsibility to safeguard, and use ethically, the information customers have entrusted to them. Without the trust of their customers no business will survive in the digital economy.
In my next blog post, I’ll discuss some further challenges short-term insurers must tackle to successfully deploy digital technology.
To learn more, download the full report:
Be Digital: A R115.2 Billion Opportunity for South Africa’s Short-Term Insurance Industry