Offering one of the highest premiums to GDP ratios in the world with an array of innovative and well regulated insurance companies, the South African insurance industry remains one of the most advanced in the world.
The large number of insurance companies in South Africa helps describe the insurance market in South Africa as competitive. Insurers in South Africa offer a variety of products for foreigners and citizens living in the country, be it health, house, car or travel insurance.
Despite the innovative disruptions going on in the market with new insurers, products and use of technology, the industry is still dominated by the largest insurance companies (Hollard, Santam, Guardrisk and Mutual & Federal) that boast 52.7% of the markets gross written premiums.
South Africa and its insurance industry
With a big chunk of the South Africa’s population remaining unbanked and either under-insured or un-insured, the industry is set to raise the bar even more with the introduction of new legislation and the development of more inclusive products to cater for low income earners by both local and regional insurers.
To make good sense of insurance in South Africa, it is grouped into two kinds. Short term and long term insurance, this consideration is important for the cover for life, disability, personal, family goods or properties and even business interests.
The short term insurance protects the insured from uncertainties as regards to personal properties while long term insurance has to do with a person’s life or wellbeing. Long term insurance is paid over a long period of time and includes disability insurance, life insurance and income protection insurance
Objective Criteria and Ratings
It’s general knowledge that the real measure of performance for an insurer should be how well it deals with its clients in their time of need but In comparing the best and worst insurance companies in south Africa, there are a few things to be considered, some of them are
- Short-Term Insurance
To understand these ratings by the OSTI (Ombudsman for short term insurance), you must first understand the meaning of their key rating factors which are Referral rate and Overturn rate.
The referral rate shows the number of complaints to the OSTI per 1000 claims received by the insurer. If the number per 1000 is higher than the average, it shows that a very high amount of the claims by the insurance company’s clients ended up as a complaint to OSTI, and this is not a good sign.
The overturn rate, which shows what percentage of OSTI complaints finalised were overturned with some benefit given to the complainant.
Based on reports of referral rates to the OSTI an average of 3/1000, Outsurance Santam and Alexander Forbes all having 2/1000 claims while Zurich had 1/1000 claims making them the best insurance companies in south Africa. While some companies that had high referral rates include RMB Structured Insurance, King Price, Ace insurance and New National with average claims of 14/1000 which isn’t good for their reputation.
For overturn rates, Outsurance, Santam, Zurich and Alexander Forbes had the lowest rates which meant the highest rankings. A few of the Insurance companies that had very high overturn rates include SAFIRE insurance (66.67%), JDG Micro insurance (66.67%), Shoprite insurance 47.06% and many more that were way above the OSTI average for year 2015.
- Long-term insurance
Now for the long term insurance companies, the Ombudsman for long-term insurance claims it helped consumers recover R184.4 million in lump sums during the year 2015. Ranking them by the number of complaints received for each insurer with respect to the number of cases resolved in favor of the clients.
The best performing long term insurance companies based on the ratio of the number of cases resolved in favor of the client to the number of complaints received by the Ombudsman include FNB Life, Alexander Forbes Life, Sanlam Life Insurance, Outsurance Life. While on the other end of the spectrum, Real People Assurance, JDG Micro Life and Channel Life have very high comparison ratio.
- Customer service
Alot of insurance companies have average customer service but the best of them have consultants that have empathy, highly efficient and friendly. Sanlam, 1st for women and Hollard are insurance companies that rate very high when it comes to excellent customer service in south African insurance companies.
- Complaint rate
The rate at which clients of insurance companies complain about the services they receive and how unfairly they’ve been treated by a certain insurance company is also indicative of how well that company is performing. The number and type of complaints give an idea of what to look out for in a particular insurer and evidently, Auto & General, Momentum, AA insurance are companies that have a low complaint rate when compared to the number of claims they received.
- Claims handling
When rating and comparing insurance companies, this is one of the most important factors to consider. The rate and efficiency of handling a claims process from a client goes a long way in positioning the insurer as one of the best insurance companies in the country. One of such companies with great claims handling is Outsurance, Santam, Zurich and Alexander Forbes. They’ve distinguished themselves when it comes to fair and commendable claims handling.
- Packages and rates offered.
The types of packages offered by an insurer is also an important factor because flexible payment options and affordable premiums also influence an insurers rating as part of best or worst insurance companies in south Africa. Sanlam, known for having the best life insurance policy plan in South Africa and Outsurance which offers arguably the best rates in the market both rank high with customers in this category.
Other factors that can be used in rating best and worst insurance companies include age, visibility, level of customer satisfaction, reputation and financial stability.
For most, the major deciding factor for choosing an insurance company in South Africa is either the monthly premium or the excess payable on claims but with the Ombudsman ratings for both short and long term insurance companies, it’s evident that the performance of insurance companies goes way beyond those two factors. The revealing statistics from these ratings are well positioned to help you make the best decisions.