Are insurers realising the full potential of their customers?
While macro-level indicators are suggesting South Africa should continue to be a growth market for insurance, the reality is the insurance sector is a challenging operating environment. An already competitive market place is having to contend with digital and non-traditional insurance products, changing consumer behaviour and customers with smaller disposable incomes.
Yet statistics from the Association for Savings and Investments South Africa (ASISA) and the South African Reserve Bank (SARB) point to opportunities for the local insurance market, with many South Africans either not insured or underinsured.
Despite the potential, consumer indebtedness also needs to be considered, with almost 10 million credit-impaired individuals in the local market. Low employment growth and business confidence are having a similar negative impact on the corporate insurance market.
These challenges have led to big name players in the local insurance industry expanding into the rest of Africa and Asia. Old Mutual, Sanlam, Momentum and Liberty have announced that significant capital has been set aside for growth initiatives outside the local market.
Changing consumer needs leading to rising expectations
Today’s consumers expect a simple, transparent and personalised experience, consistent across their collective interactions with insurers and spanning different channels and devices. This expectation is heightened by the experience provided by digital leaders such as Google, Samsung, Amazon and Zando. Compare that to the interface between customers and insurers in South Africa, dominated by intermediaries and call centres, with a myriad of contact numbers and long waiting times.
Disruptors are capitalising on these increased expectations, particularly from younger consumers, making in-roads into the traditional insurer market and driving insurers to add new capabilities to meet these rising expectations.
Gartner indicates 64% of the world’s 25 largest insurance companies have already invested – directly or indirectly via their venture capital arms – in insurance technology (InsurTech) startups3.
However, the more fundamental challenge insurers face is how to engage customers beyond the typical once-a-year interaction if no claims are processed. Since the large majority of insurance continues to be sold through intermediaries, this means helping agents and brokers to engage customers, while also providing customers with the option to interact directly with their insurers.
Using a multi-disciplinary approach to deliver significant business impact
Improving the customer experience is a top priority for most organisations, yet finding and implementing the right initiatives can be challenging. Many small-scale changes don’t have a significant business impact, while large changes can take too long to implement or often be too complicated and momentum is lost.
Most organisations are investing heavily into business and IT, combined with various internal initiatives, to maximise customer value—a key imperative for organisations to enable them to achieve their three to five year goals. This requires flow across the entire client value chain, by breaking down organisational silos that impact customers’ experiences.
BSG’s 20 years of experience ensures we understand the challenges faced by organisations when overcoming these silos. Delivering the required results also necessitates an understanding of how the change will impact the entire ecosystem. Too often we see meaningful work taking place independently within business areas, or being duplicated or double counted from a business case perspective.
Despite challenging times for the insurance industry, the International Monetary Fund4 predicts economic growth of 4.6% in 2017 for emerging markets and developing economies, higher than the global forecasted growth of 3.4%.
Insurers would do well to move away from “business as usual” and look for new ways to achieve growth, drive customer loyalty and grow their customer base.
- The South African insurance gap (2016), 9 October 2016, ASISA
- Quarterly Bulletin, September 2016, South African Reserve Bank
- Innovation Insight for Technology Startups in the Insurance Industry, 21 July 2016,
Juergen Weiss and Manav Sachdeva, Gartner
- International Monetary Fund, World Economic Outlook, Update October 2016
About the author: An executive responsible for knowledge and insights, Gary Stocks is passionate about unlocking potential and accelerating performance at BSG’s clients and people. His focus is on creating value in an increasingly digital world through customer-centric thinking and data-driven insights.