How well do you speak with your policyholders? It’s not enough to deliver a message. It should be written in a way your customers understand.
The Australian Competition and Consumer Commission (ACCC) recently released its annual report on the private health insurance industry, finding serous shortfalls in the way some insurers notify consumers of reductions in their insurance coverage and benefits.
The ACCC noted that among some insurers, poor practices exist around notifying consumers of cuts to their insurance coverage and benefits. In some instances, insurers didn’t notify consumers at all about reductions in their coverage/benefits. In other cases, the information provided used “unclear, uninformative or misleading” information.
Such practices have a direct impact both on the customer and the insurer. From a customer perspective, the ACCC points out these examples of poor communication are leading to bill shock, inadequate cover and reduced access to health care. From the insurer’s perspective, it can see customers opt out of their policy or exit the private health system altogether.
Diminishing the value of key documents
While it’s critical for all financial services organisations to tick every compliance box, customer-facing messages can be so lengthy and mired in legalese they become incomprehensible to the lay person.
Product disclosure statements (PDS) often fall into this trap. In late 2015 the Insurance Council of Australia (ICA) noted that PDS “have become so focused on complying with financial regulations and limiting an insurer’s liability that their value to customers has been greatly diminished”. The ICA went on to add, “If consumers don’t understand the policies they’re buying, it can result in major financial losses, angry customers and possible reputational damage for the insurer – everyone loses”.
Changing the way we think
In its report ‘Too Long; Didn’t Read’, the ICA made several recommendations including exploring new forms of electronic disclosure that are more engaging and can better target the information most applicable to individual customers.
Changes to the way financial institutions communicate with customers may take time. But providing clear, simple information helps to bridge the knowledge gap between institutions and their customers, and that is a vital part of maintaining a long-term relationship.
ICA, Clearer, simpler, more effective: Insurers look to reform product disclosure process for consumers, 1 December 2015