Demystifying Insurance

Lisa Brown (AIA), Brenda Cude (U of GA) & Angela Nelson (MO DOI) discuss the need for simplicity when explaining insurance matters to consumers.
Lisa Brown (AIA), Brenda Cude (U of GA) & Angela Nelson (MO DOI) discuss the need for simplicity when explaining insurance matters to consumers.

This innovative panel discussion provided thought-provoking insights on how the NAIC is working with insurance and communications professionals to provide simple, plain-language information to explain the intricacies of the insurance industry. Panelists Lisa Brown, American Insurance Association; Brenda Cude, University of Georgia; and Angela Nelson, Missouri Department of Insurance explained, from unique perspectives, how consumer affairs professionals must recognize insurance is the only product consumers purchase without knowing exactly what it is. How can the industry break down insurance products to ensure consumers know what they are buying? Take a look at what’s been accomplished to date:

Lisa Brown (AIA) emphasizes that a working group of regulators, trade associations and insurers has developed a resources guide.
Lisa Brown (AIA) emphasizes that a working group of regulators, trade associations and insurers has developed a resources guide.

Solving the mystery
Regulators struggle to help consumers be better shoppers with a product description that is frequently inconsistent, lengthy, AND extremely difficult to read in terms of esoteric language. Consumers and federal government agencies are pushing back and demanding more transparency. NAIC’s Consumer Transparency and Readability working group has been established to determine what regulators can do to help the industry attain clarity and improve the capacity of consumers to purchase insurance knowledgeably.

This has been a successful, collaborative, and apparently happy, working group with strong industry and consumer input. Consumer input was critically important for this group as they worked together to identify word choices as the key to consumer understanding policy terminology. This group has labored to create a resources guide, now available to regulators who may choose to make it available to consumers.

Of more immediate impact, this working group developed an informational series on how consumers should shop for insurance and, as a result, shopping tools were made available. The group has glossaries, work sheets, shopping guides, a list of what consumers should ask agents, a how to read the declarations page guide and more—all constructed with common language—and made available to consumers.

Brenda Cude (University of Georgia) explains the workings of NAIC’s Consumer Transparency & Readability working group.
Brenda Cude (University of Georgia) explains the workings of NAIC’s Consumer Transparency & Readability working group.

Results
Those states (Nevada and Missouri were cited) that have integrated consumer-friendly options, such as posting product-specific policies on websites for top carriers, have generated enormous positive publicity for the industry and enhanced access to companies for consumers. Some states have passed laws such that information can be made available online as an option to help consumers.

On the life and health side, NAIC drove a summary benefits form template and a terms statement, both created with under the plain-language initiative.

What consumer trends are being tracked to help solve the puzzle?
The insurance industry is working to connect consumers with information to help each make the right choices for these important products. Here are some of the consumer trends being tracked that may have a big impact on how business is conducted in the future:

  • Consumer demand for electronic delivery of communication (policies, notifications, cost statements).
  • Consumer financial literacy, resulting in a lack of understanding of insurance terms and nuances.
  • General confusion on product: Insurance products are viewed as savings accounts—not fully understanding that insurance products save consumer from devastation, not aggravation.
  • Consumer concerns that insurance provides a product that, when used, can be cancelled, leading to confusion and suspicion.
  • Life and annuity products need special focus due to the potential special needs (seniors) of target consumers.

Angela Nelson (MO DOI) explains the need to focus on consumers in all communications.
Angela Nelson (MO DOI) explains the need to focus on consumers in all communications.

Next steps
Although not focused on technology, the NAIC working committee is aware that technology can help. To address needs, NAIC is developing apps—home inventory and representative checks—leveraging technology to make information readily available to consumers. In addition, this group is working on:

  • Making recommendations on policy organization and structure,
  • Increasing consumer comprehension,
  • Promoting comparison shopping,
  • Working to educate to first-time buyers, and
  • Educate consumers to know what to do when they have a claim.

The biggest pursuit is, as always, to promote industry-wide cooperation so that consumer-friendly information can be created—with the ultimate goal of demystifying the industry for consumers.

CONTACT INFO
Lisa Brown
Sr. Counsel & Director of Compliance Resources
American Insurance Association
2101 L Street NW, Suite 400
Washington, DC 20037
202.828.7104
lbrown@aiadc.org
www.aiadc.org

Brenda J. Cude
Professor, Department of Housing & Consumer Economics
University of Georgia
305 Dawson Hall
Athens, GA 30602
706.542.4857
bcude@uga.edu
www.uga.edu

Angela Nelson
Director, Division of Market Regulation
Missouri Department of Insurance
P.O. Box 690
Jefferson City, MO 65102
573.522.9869
angela.nelson@insurance.mo.gov
www.insurance.mo.gov

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