A number of car owners in South Africa believe that insurance is unnecessary after paying off their car financing, according to the results of a survey by the global information and insights company TransUnion.
In its “Insurance Trends Survey” report on South Africa, TransUnion says that in the past six months, nearly a quarter of respondents to the survey did not have motor insurance while using or owning a car.
Among these respondents, 23% believed insurance was unnecessary after their car purchases were paid up fully, a view that was particularly widespread among Gen X at 29%. This indicates a significant opportunity for insurers to educate consumers about the ongoing benefits of maintaining insurance coverage.
Twenty-two percent of respondents could not afford insurance; this financial strain was evident in all age categories, particularly among Gen X (31%) and Baby Boomers (27%). The reason was particularly concerning as it highlights the impact of high premium costs and the ongoing cost of living crisis, suggesting financial strain is a significant barrier to maintaining car insurance coverage.
Shopping for motor insurance
In the past six months, 59% of car insurance consumers shopped for new motor insurance options, and 41% planned to do so in the next six months.
In 2Q2024, 24% of respondents cited purchasing a new vehicle as one of the main reasons for shopping for car insurance, while 18% pointed to the impact of advertising. However, the majority (29%) of respondents stated high premiums were the primary reason for seeking new car insurance. This was particularly significant among Baby Boomers (47%). Additionally, 11% stated they were “just browsing premiums,” further indicating dissatisfaction with their current premiums.
Sourcing comparative quotes online was the most preferred method respondents used when shopping around for car insurance (29%). This was followed by using an agent/broker offering policies from multiple companies and insurance company websites or mobile apps (22% each). It must be noted although an insurance company's customer service centre was the second least preferred method of shopping for insurance (18%), it was the most used method for obtaining quotes.
Switching insurers
The follow-through rate was high with over half (55%) of respondents switching providers after shopping around for insurance. Respondents primarily switched car insurance providers in search of cheaper premiums (41% cited this motive). This trend was particularly pronounced among Gen X (55%) and Baby Boomers (67%), indicating a strong cost sensitivity among older customers.
Additionally, 23% of respondents switched for better coverage, reflecting a significant demand for more comprehensive insurance options.
Improved customer service, cited by 15%, underscored the importance of service quality in retaining customers.
Customer retention
The survey findings underscore the multifaceted nature of customer retention in the car insurance industry where loyalty, competitive pricing, and excellent customer service play pivotal roles.
Loyalty was the primary reason 24% of respondents chose not to switch car insurance providers, particularly among Gen X where the rate was 38%. This indicates a strong sense of brand allegiance within this age group.
Additionally, 21% of respondents stayed with their existing providers because of lowered premiums, suggesting competitive pricing strategies effectively retain customers. This factor was particularly crucial in the highly price-sensitive car insurance market.
Moreover, 21% of respondents valued assistance in understanding new costs; this reason was significant for 25% of Millennials. This highlights the importance of clear communication and customer support, particularly for younger customers who may prioritise transparency and guidance when making financial decisions.
Getting motor insurance quotes
Among those who indicated they were shopping for insurance in 1Q2024, the method of obtaining car insurance quotes varied significantly. Customer service/call centres emerged as the most utilised channel with 46% of respondents opting for this option. This method was particularly favoured by older Boomers aged 66–75, with a notable 53% preference rate among this demographic, indicating a preference for personalised assistance and guidance in insurance matters.
Insurance company websites or mobile apps were also common with 44% of respondents reporting using this method. This method was predominantly popular among Millennials where the adoption rate soared to 47%, reflecting their comfort with digital platforms for managing insurance needs and seeking information independently.
Comparative quote websites secured the third position at 41%, highlighting their appeal among Millennials was an adoption rate of 43%. This demographic preference suggests a shift toward online platforms that facilitate comparison shopping for car insurance policies with transparency and ease. It highlights a growing preference for digital convenience in the insurance shopping process.
Telematics
In the past six months, 64% of respondents were offered a car insurance policy featuring telematics — which involves an in-car tracking device or smartphone app to monitor driving habits. This offer was particularly prevalent among Millennials and Gen X with 73% and 55%, respectively receiving it.
The follow-through rate was notably high with 57% of all respondents opting in, especially among Gen X where the opt-in rate was 60% and Millennials was 59%. This high acceptance rate among younger drivers suggests a growing comfort and willingness to adopt technology-driven solutions for potentially lower premiums and personalised coverage.
The survey was conducted in May 2024 with 1,000 South African consumers holding active vehicle and homeowners insurance policies.