Knowing Me, Knowing You ... an insightful approach to insurance

‘Insurance companies sometimes face criticism simply because customers don’t understand the product they’re buying, but we’re trying to change that’

- says Director of Intermediated Distribution - Personal Lines, Sue Coffey.

‘Behavioural economics sounds complicated, but it simply means understanding your customer and communicating information to help them make decisions in a way that’s relevant and meaningful to them.‘

The majority of today’s insurance buyers live busy lifestyles. They find themselves bombarded by communication messages from every quarter, to the point where they are forced to ration their attention span towards the items that attract them, and which appear to be of the utmost value to them.

Let’s be honest – an insurance communication is not usually perceived as reaching that level, is it? While say, a message relating to progress on an on-going claim is likely to grab their eye, the arrival of the actual policy hardly registers.

And there is good reason for that. Traditional policy wordings contain an awful lot of text and jargon, customers find them difficult to read and understand. Basically there is little encouragement for customers to even open their policy document let alone read it.

Take a look at the typical insurance policy document. A bulky number of pages with no index, confusing layouts, minimal graphics, blocks of small print – all set out in a way that puts off even the most discerning reader. It’s no wonder that the majority of policyholders never bother to read their policy. They may say that they simply do not have the time to do so, but the underlying reason is that it can be hard work!

The first step towards a new approach to encourage customers when it comes to looking more closely at insurance communications and policy documents, is to create more interest and draw customers in with a more visual, user friendly style – but without veering too far towards over-familiarity.

Making the document more pleasing to the eye is key. The customer has paid a lot of money, often for a forced purchase, for a product that is intangible.   It doesn’t ‘exist’, and cannot be handled in the same way as a new tablet or item of designer clothing. The policy document and the communication that accompanies it is all there is to show! The entire value of the outlay for the insurance ‘promise’ from the buyer’s perspective is tied up in the moment the document is opened.

That crucial moment decides whether the policy attracts interest and acquires a value in the mind of the buyer, or goes straight in a drawer as a begrudged purchase.

So, pleasing on the eye, no jargon, and easily understandable. Put simply, all communications should be presented in a consistent pattern written entirely from the buyer’s viewpoint. Placing yourself in the position of the reader, whilst simultaneously getting across all the salient points that the insurer needs to make is another way of putting it.

That means understanding your customer and communicating information to help them make decisions in a way that’s relevant and meaningful to them.

It’s true that customers don’t always understand the product they’re buying, but that’s no reason to believe we cannot change that over time. This theme contains the prospect of the practical application that customer expectations can be raised with significant improvement in customer satisfaction and retention.

Addressing the issue of improving the way information is presented to customers is justified by the big difference it can make to customer satisfaction. And it becomes essential for those insurers for whom customer service is a 100% commitment.

There’s a lot of science to back the theme of tempting customers into reading and understanding their policy documents. It may be a long road, but if you start from the point that customers are people just like us, and we want to communicate in a way that we’d really appreciate too, then it really just boils down to being fair, open, reasonable and empathetic.

This article first appeared in the December issue of Insurance People magazine.

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