Factors influencing the retail mass market purchasing decision of life insurance in South Africa
ABSTRACT In South Africa, the provision of financial services to the retail mass market, has been dominated by insurance providers such as Old Mutual, Sanlam, Metropolitan, Momentum, Liberty Life and Discovery, with the exception of the four main banks. With the changing market conditions, increased deregulation of the industry and the introduction of technology, the insurance industry has been infiltrated by smaller non-traditional players, thus increasing the competitive landscape. In addition, the financial crisis of 2008, the increased indebtedness of the consumer and the changing customer needs have changed the customer’s behaviour towards financial services. This has, in turn, seen an increase in policy surrenders, cancellation and early withdrawals of customers from life insurance policies. This behaviour negatively impacts the profitability of the providers and reduces value for the client. This paper tests the hypothesis that the elements believed to influence the acquisition and retention of the retail mass customer are equally important across gender, age and income. Walk in customers from a large branch of one of the prominent life insurance providers were voluntarily asked to complete the research questionnaire. The survey, comprising paired comparison conjoint tasks, was deployed and analysed using the conjoint method enabled by the Sawtooth Software SMRT (2002). For the drivers of the acquisition of a retail mass customer, the attributes chosen and the resulting order of importance were Brand, Product features and Product pricing. The most preferred levels for the different attributes were the Traditional provider for Brand, the comprehensive product package (life, medical and saving) for the Product features and the cheapest product price (R100) for the Product price. For the drivers of the retention of a retail customer, the attributes chosen and the resulting order of importance were Brand, Quality of the service agent and the Responsiveness of the provider. The most preferred levels for the different attributes were the Traditional provider for Brand, keeping in contact and trustworthiness were equally preferred for the Quality of the service agent and the quickest response time (same day) was most preferred for the Responsiveness of the provider. These findings are useful for the provider to consider in defining customer acquisition and retention strategies and as a guideline to the investment choice for the most impactful initiative. This should aid in not only improving business profitability, but directly addressing customer needs.
Life insurance, Insurance companies, Consumer behavior -- South Africa.