Short-term insurers in South Africa must strengthen their customer relations if they want to deliver successful digital offerings. Their responsiveness, relevance and use of smart solutions need to improve.

Short-term insurers need to strengthen their relations with their customers if they want to successfully roll out new digital products and services. Deploying sophisticated new digital technology without addressing current weaknesses in their dealings with customers is a recipe for failure.

Our research, as I mentioned in my previous blog posts, reveals that short-term insurers in South Africa need make it easier and more convenient for consumers to engage with them. They must also adopt business strategies and practices that will encourage their customers to trust them more.

Our survey of 1,500 local retail insurance customers identified three further customer relations weaknesses that insurers need to address urgently.

Responsiveness

Customer churn is high in the local short-term insurance industry. More than half the people we surveyed have been a customer of their current insurer for less than three years and around a third have recently switched. Poor responses from their previous insurer, specifically their failure to meet expectations, was frequently cited by customers as the reason for the change.

South African Insurance Customers - Important Factors and Delivery Gap

Local short-term insurers need to improve their responsiveness to customers. Claims services, product pricing and policy management need particular attention as they frequently cause customer dissatisfaction. Paying greater attention to customer needs, and quickly and efficiently remedying complaints, will significantly enhance customer retention and loyalty.

Relevance

Our survey reveals that local insurance customers have very diverse needs.  More than half the people we canvassed, most of them young consumers, are interested in value-added digital services.  And they’re willing to part with personal information to receive tailored offerings and incentives.  However, many older respondents are more interested in products and services that help them protect their assets.

To satisfy the many different needs of South African consumers, insurers have to improve their understanding of their customers. More personalized services, often incorporating digital technology, will enable them to better identify customer requirements and track changing needs and preferences. Insurers can use this information to further enhance their products, develop new offerings and identify potential partners that could broaden the services they provide customers.

Smart solutions

South African consumers have a relatively high awareness of the potential of smart solutions that use digital technology, such as wearables or home monitoring systems, to reduce insurance costs and risks. More than 40 percent of the insurance customers we surveyed, for example, know about telematics systems that track the behaviour of vehicle drivers – slightly more than their UK counterparts.

However, only 16 percent of respondents are using telematics systems and a mere 10 percent of the consumers we canvassed plan to switch to an insurer that offers such technology. The big barrier is a lack of trust. Almost 60 percent of respondents are concerned that insurers would use the information generated by telematics systems to increase premiums or avoid paying claims.

Smart solutions offer insurers huge opportunities to expand their offerings, improve efficiencies and enter new markets. However, insurance providers can’t capitalize on these opportunities until they have built stronger, more trusting and transparent relations with their customers.

For more information about the opportunities digital technology offers short-term insurers please contact me at:  jean.a.olivier@accenture.com.

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