Life insurers score strongly in Customer Experience Index, but gaps remain

South Africans demonstrate a remarkably high level of satisfaction with their life insurers, according to groundbreaking research released this week by the University of Pretoria (UP). The inaugural 2024/2025 Life Insurance Customer Experience (CE) Index report reveals an industry outperforming many other sectors, with an overall CE score of 74.1 out of 100.

“The life insurance industry is currently performing the best of all industries we've measured,” says Professor Adré Schreuder, Head of the Industry Chair in Customer Experience at UP. “Satisfaction across the sector is generally very high, especially when it comes to overall service delivery quality, staff competency, process efficiency, and the reliability of digital tools. The survey depicts an industry that pays claims promptly, resolves problems decisively, and has generated strong goodwill.”

This year’s index, based on 2,987 comprehensive audited interviews, showed the local industry exceeding international benchmarks in several crucial areas. Most notably, only 6.6% of customers reported problems with their insurers, beating out the global best practice norm of 10%. When issues have arisen, insurers successfully resolved 53% of cases completely, also meeting international standards.

As the first benchmark of its kind in the country, the CE Index provides a comprehensive, scientific, independent measurement of the entire end-to-end customer experience, focusing on the five largest local life insurers by market share. Looking beyond single metrics such as customer service or reported satisfaction, the index features seven interconnected “cause and effect” components, including quality of experience, value perception, problems and resolution, and loyalty.

Leading the rankings, Sanlam secured the coveted Life Insurance Overall Industry award, as well as the Contact Centre and Broker/Advisor Channel Category titles. Old Mutual claimed the Life Product Category award, while Liberty and Momentum shared honours in the Tied Agent Channel Category.

Notable gap between quality and value

Respondents’ positive perceptions around the industry’s ability to deliver high-quality service experiences is best reflected in the index’s Quality of Experience measurement, which scored an exceptional 80 points out of a possible 100.

However, the study pointed to areas for improvement, as positive sentiments did not carry to customers’ opinion around the value of insurance products. The Value of Experience Index only scored 73.3 points – a striking 6.7-point difference from the Quality score – highlighting respondents’ dissatisfaction with premiums and perceived value for money, wasted time, and administrative inefficiencies in dealing with insurers. The three most common areas of complaint were related to payment and premiums, service, and policy and product concerns.

Schreuder notes, “The challenge is that buying life insurance often begins with a clear honeymoon phase – there’s a sense of goodwill, security, and a feeling that you’re doing right by your family. But if brokers and tied agents only check in occasionally, and a simple change like a new address, bank or employment details turns into a frustrating process, or a payment bounces or coverage unexpectedly lapses, consumers’ perception of value may diminish.”

Second gap in loyalty

In terms of loyalty, life insurers reached 73.9 points out of 100, short of the desired 80-points by international benchmarks. The study also revealed a sizeable action gap – although many consumers and policyholders expressed willingness to recommend a brand, with 50.3% being described as promoters on the basis of the popular “net promoter score” often utilised within the industry, only 16.5% actually do so. The behaviour-to-intention ratio of the life industry of 32.8% compares much lower than the 41.8% behaviour-to-intention ratio of the consumer banking industry.

“At the end of the day, customer experience is predicated on customer loyalty. A satisfied policyholder is far more likely to stay with an insurer for the rest of their life, buy supplementary cover or products, and recommend the brand to others. And until declared intent to recommend becomes action, insurers risk mistaking goodwill for growth, lulling brands into a false sense of security that doesn’t translate to the bottom-line.”

Customer experience leads the pack in sales

An interesting finding further emphasised the critical importance of consumer advocacy and recommendations, as a notable 50% of new client policyholders said they chose their current insurer thanks to a referral or recommendation from someone they trust, while just 8% of new business was driven via direct sales pushes.

The index therefore exposed a significant mismatch between marketing spend and actual acquisition results. Referrals account for the majority of new business, yet industry budgets remain skewed toward above-the-line advertising like broadcast, newspaper, and billboard campaigns, he explains.

“The industry is taking a backwards approach, spending the vast majority of their budgets on ventures that bring in the least number of sales. The index confirms that referrals driven by customer experience and loyalty ultimately power growth. Life insurers who reallocate even a fraction of their advertising spend into improving their customer experience stand to reap extra-ordinary returns.”

Looking ahead, while the life insurance industry is performing admirably, the CE Index now gives insurers a granular view of where to focus in addressing areas of weakness, while enabling individual companies to measure and refine performance over time. 

“For South Africa’s life insurers, the CE Index serves as a roadmap. Subscribed members can access detailed findings through the CE Index portal, allowing them to benchmark their performance against competitors, and drill down to the precise pain points that will close competitive gaps and raise the bar for their customer satisfaction.”