Piggy has noted with concern how several insurance telesales consultants in Zimbabwe have employed pushy sales techniques such as cold-calling and relentless follow-ups. As a result, insurance companies have faced criticism and negative associations due to their ongoing sales tactics employed by call centre agents.
The lack of transparency when pitching products has also led to customer frustration and a tarnished reputation for the industry. These sales agents oftentimes resort to aggressive sales techniques, pressuring individuals into purchasing policies they may not require or fully understand. This approach has created an atmosphere of mistrust and scepticism, leaving customers feeling taken advantage of and, ultimately, a failure in the product.
Piggy contends that insurance companies in Zimbabwe should focus on (i) simplification, (ii) education of products and (iii) on how to become more consumer-centric.
According to Piggy’s research, most African markets have a penetration rate below 5%. A major source of inefficiency in African insurance markets is the lack of insurance product education. Many insurers across the region still have traditional business models and rely heavily on brokers and sales agents for distribution.
As a result, Africa has lagged other markets such as North America that are more developed in terms of (i) digitisation, (ii) distribution channels (iii) insurance product education and (iv) depth of financial advisors.
According to the 2023 Insurance Report by Mckinsey & Company, insurance market maturity and sophistication are highly correlated.
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Listen to the customer
An approach that is hinged on providing education and advice as opposed to pushing sales ensures that service providers remain relevant to the customer.
An interesting case study is ManyPets in the United Kingdom which started as a digital broker and then realised that by focusing on pet insurance — the one specific customer need that emerged again and again — they could have an outsize impact in one segment and differentiate themselves better.
The company is leading in its segment given that it made use of customer feedback to design features missing in competitor products and to provide a great customer experience.
The UK insurance market is one of the most sophisticated in the world. While there is stiff competition, ManyPets has differentiated itself by being customer centric.
Focus on education, advisory services
In many African markets (including Zimbabwe) there are still wrong perceptions about insurance generally and this has contributed to the low uptake of risk products.
The following are comments from different farmers during a survey about insurance:
“Insurance is just a way of taking people’s money to be used by the privileged and educated in society. Educated people just use it as a way of enriching themselves. How many times do unexpected calamities happen in a year? We have engaged in farming for a long time without insurance and we are still surviving, why the need?”
“Even for me as an educated person, if I take the case of vehicle insurance, if it had not been the fact that it is mandatory, I will not have insured my vehicle, why pay for insurance when the likelihood of having an accident or calamity is very slim? There is no way I will insure my crops under cultivation”
The results of the survey clearly indicated that there is need for education on the benefits of insurance and risk management. Through sensitisation campaigns and one-on-one engagements, players in the insurance sector can explain how insurance works to build confidence in the coverage.
Overall, insurance plays a vital role in providing financial security and peace of mind for individuals and their families. The focus should therefore be on education and providing advice on the benefits of risk management as opposed to employing pushy sales techniques.
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- Matsika is the managing partner at Mark & Associates Consulting Group and founder of piggybankadvisor.com. — +263 78 358 4745 or batanai@markassociatescg.com/ batanai@piggybankadvisor.com