Tag Archives: consumer bill of rights

Why We Need a Consumer Bill of Rights

As common as insurance is, most people do not understand this complex financial instrument.

According to the Bureau of Labor Statistics Consumer Expenditure Survey (2014), insurance is a consumer’s fifth highest monthly expenditure behind housing, transport, food and pensions. For many Americans, if you add up all types of insurance (auto, health, etc.), monthly total premiums can surpass housing costs.

But the insurance industry has its fair share of participants (companies, agents, wholesalers) who thrive on complexity and make sales that do not fit the client’s need. There has been a tendency — especially with annuities, life insurance and long-term-care insurance — to introduce insurance products with more options. And each time an option is added, it becomes more challenging to understand that product.

Often, this complexity is not a matter of intent; it is simply that even those within the industry or those who participate in the insurance procurement and review process (third party advisers such as financial planners, CPAs, etc.) do not understand insurance. The majority of people and companies do a good job, but there is a significant gap in insurance literacy in this country.

See also: Best Insurance? A Leadership Pipeline

The Insurance Consumer Bill of Rights was created to provide simple, easy-to-understand guidelines for everyone involved in the insurance ecosystem, including consumers, insurance agents, wholesaler, insurance companies and financial advisers.

The Insurance Consumer Bill of Rights is based on the simple premise that insurance agents, wholesalers and companies should place the consumer’s interests first, to the best of their abilities. The Insurance Consumer Bill of Rights provides simple, clear and reasonable guidelines to accomplish this goal. It is a standard of excellence for all in the insurance industry.

The importance of this movement is that, for many years, insurance has been a black box, something people know they need, although they have no real, unbiased information about it. And most people do not have the right coverage to fit their needs.

In my 30-year career, starting as an agent before making the transition to a fee-based insurance consultant/litigation consultant/author/consumer advocate, I have seen that the situation behind the scenes is often not pretty. However, the majority of these situations could be avoided if all members of the insurance industry followed the Insurance Consumer Bill of Rights.

Insurance consumers should have the right to receive any information that they request in a timely fashion. They should also be provided with all relevant information needed to make a decision in an easy-to-understand fashion. The goal is to not flood the consumer with something like a mutual fund prospectus; rather, it is to provide them with useful information.

It is always a win-win situation when all parties come out ahead and are on the same side of the table. Truth always has a way of coming out, and, to get ahead in this digital world where there are fewer secrets and more information and choices, those who strive to provide the highest-quality service and information will thrive.

See also: Fast and Slow: the Changing Landscape

For many years, consumers have ended up with insurance they don’t need, with premiums they either cannot afford or really see no value in paying. It is time to change the conversation so that consumers end up with coverage that fits their needs, with premiums they can afford into the future.

The Insurance Consumer Bill of Rights is a playbook for consumers, agents and companies to follow that puts everyone on the same page.

Monitoring an insurance policy and making adjustments to an insurance portfolio is something that is almost always overlooked. Insurance needs change. Sometimes, the change is as simple as getting a new car, while other times it can be more complex and overlooked, like having a new child who is not added as a beneficiary to an existing life insurance policy.

This is where the Insurance Consumer Bill of Rights matters. Making these adjustments, just like having regular maintenance done on your car, is what will ensure that a consumer has the right coverage in place at the time of making a claim. If the right coverage is not in place at claim time, what is the point of having insurance?

While it is not a panacea, and there still would be bad actors and inappropriate sales, the Insurance Consumer Bill of Rights is a call to action and gives guidance to consumers on what to look for, what to expect and what they have the right to.

Knowledge is power, and the power should be in the hands of the customer. Having and knowing your rights will protect and benefit consumers, along with calling the insurance community to task when needed and helping consumers and agents optimize insurance coverage and minimize premiums. Join the Insurance Consumer Bill of Rights movement!

The Insurance Consumer Bill of Rights movement is gathering momentum, and I want to thank all of its supporters. Recently, the Insurance Consumer Bill of Rights has received numerous mentions in the press:

  • Featured Article: It’s Time for An Insurance Consumer Bill of Rights — a reflection on how the Department of Labor Fiduciary Rule is a pre-cursor to the Insurance Consumer Bill of Rights.
  • As part of a joint effort with Chris Huntley’s Whole Life Rebellion that called for signing the petition, Forbes.com’s Barbara Marquand stated: “Sign the ‘Insurance Bill of Rights,’ a petition created by Tony Steuer from InsuranceLiteracy.org. Among other things, the bill says agents should act in consumers’ best interest and recommend affordable and appropriate coverage. (Click here to view the article.)
  • In an article on PTmoney.com titled “The Truth About Whole Life Insurance — Ethical Obligations and the Insurance Consumer Bill of Rights), it states, “Doctors take the Hippocratic oath and financial advisers the fiduciary oath. These are ethical codes professionals swear to live by in the execution of their duties. As of today, the life insurance industry has no such code, which is a travesty. Tony Steuer (InsuranceLiteracy.org) has created the Insurance Consumer Bill of Rights on Change.org, which seeks to implement a similar code of conduct in the insurance industry requiring all agents to act in the consumers’ best interest. The desired result would be agents targeting consumers’ specific needs to provide them with the most affordable and appropriate life insurance for their unique circumstances. Insurance agents should be held accountable for the advice they offer.” (Click here to read the article.)

And that is just some of the talk. So, what’s the next step? Please continue to share the campaign via email and on social media. And you can now contribute to the Insurance Consumer Bill of Rights movement through the petition page on Change.org, or you can support the Insurance Consumer Bill of Rights movement on Indiegogo.

Dare to Be Different: New Ways to Communicate With Customers

Two insurance industry surveys for 2014, released by J.D. Powers (Auto Purchase and Property Claims), conclude that timely and relevant communication is the dominant factor in customer satisfaction. The studies show the intrinsic value of communication in building trust with customers, resulting in retention and in growth.Roughly 45% of insurers cited customer-experience levers as top business goals in research on customer communication released by Forrester in November 2012. So we would expect insurers to tap into the opportunity to engage customers in ways that drive renewals, deepening relationships and brand affinity. Obvious, right?The reality is a far cry from this.Instead, insurers have been focusing on the very obvious savings from the reduced need to print and mail the communication documents, by pushing the customers to digital channels.Here comes the second paradox.You would hope that customers are now far more engaged through the digital platform. But a survey conducted by Nationwide Insurance reveals that 60% of customers have not read their policy in full in a year, and only one in five customers believed that they completely understood their policy. The top two reasons cited are that documents are too long and too complicated.

The Consumer Bill of Rights in Texas is nine pages long — even those who receive it won’t read the full document. For most, buying insurance is like buying a car without knowing if it will accommodate your two wonderful kids, wife, the bags from your normal shopping trips and a stroller.

Nearly 85% of communications with a customer after a sale are in categories covered by regulation: contracts, endorsements, notices, amendments, bills and statements, notifications, follow up notices, reminders, etc. According to the Forrester study, two out of three insurers are worried about avoiding noncompliance rather than focusing on communications that can deliver far more measurable returns from better customer engagement.

Meanwhile, more than half of customers who file a claim don’t understand how to do so and can have a bad and emotional experience, while those who don’t file a claim are never given a way to visualize the protection they enjoy.

Are insurers too focused on regulatory issues and not engaged enough with the customers whose hard-earned money they hope to keep receiving? Can insurers build trust with customers and sell more and faster?

Our research suggests that some insurers have taken the lead and have implemented communication capabilities that are delivering benefits in silos. But the industry as a whole has not yet unlocked the value of service communication to generate lower-cost relationships and build trust faster, replacing expensive strategies led by marketing. We believe the starting point is to have a good understanding of contact strategy and its nuances, mapped to what customer value at different stages.

Here is what insurers can do to go from Regulation to ROI.

  • Produce a blueprint of customer communication touch-points across the product lifecycle. The important factors are: business process, event, frequency, emotion, customer segment, channel and interaction sequence. It’s crucial to define the right performance indicators and establish a tracking mechanism. The blueprint will unlock the value of relationship through continuous engagement. Today, communications operations mainly take a “stay out of jail” approach.
  • Make communication proactive, not reactive. Several surveys show that timely communication can limit escalation to 6% of customer issues, whereas delays and unclear communications increase complains by as much as a factor of three. Billing presents the best opportunity to engage customers, through snippets of communication before and after the billing transaction. The same approach can be used to prepare customers for changes in premiums, rather than going through several painful calls around renewals that erode trust. For example, Allstate communicates “reason for premium change,” which reduced the call volume and cost of contact drastically.
  • Make a meaningful channel shift — Of the increasing number of customers who own a smartphone, 90% want the option of buying and obtaining service through mobile apps. The importance of mobile is demonstrated by the fact that 95% of text messages are opened within seven minutes of being received; insurers should look into using push notification through this low-cost channel. To avoid customer pushback about SMS cost, insurers should look for free-to-end-user (FTEU) SMS, which is cheaper than print-and-mail. An integrated communication center should be developed that spans across digital channels and other communication options, including paper. Investigate the possibilities of social media. Include capabilities for e-signatures.
  • Provide a digital policy with intuitive drilldown into all features. Mobile policy download, catastrophe alerts, billing alerts, claims alerts, mobile ID cards and a digital locker all drive up channel adoption and communication effectiveness, and there is opportunity to go much further in treating a policy as a mobile app.
  • Produce creative content. AT&T’s smart video bill directly addresses the population that wants information on-the-go. Smart video is customized for individual customers and helps in visualization of benefits. Allstate’s “Mayhem” advertisement provides this sort of visualization, albeit from a marketing perspective. The same investment can easily be used to address the accessibility requirements for ADA (Americans with Disability Act). GEICO’s coverage coach is an animated tool used for educating the customers as to what coverage can be right for them. Imagine if this visual approach was applied to claims, at the filing stage; it would help customers understand their coverage and reduce complaints. Progressive, GEICO and USAA send periodic news through print and emails that are relevant to the season; for example, something explaining ways to protect a boat or motorcycle during winter. This communication improves customer engagement across the life cycle.
  • Leverage emerging approaches, such as in-car-entertainment, wearable media and the “connected home.” Gamification — using techniques like those for Angry Birds, rather than like a traditional insurance policy — is another emerging approach that can be used. The customer can also be provided virtual assistance to simulate an accident scene, which will help with an assessment while greatly reducing fraud. Gamification should be used to provide customers a visualization of the claims process and the roles they play, which will improve the experience and increase retention.
  • Understand the customers better – Most insurers deliver marketing messages often but do not see a corresponding lift in their results. This is simply because they aren’t taking advantage of today’s data and analytic technology to understand customers as well as they could and to deliver more-individualized, relevant messages. Effective use of all available information about the customer is the cornerstone of this approach. Retailers tend to lead the pack here; insurers can learn from them. Try to sell when the customer is happy; if he is not happy, then create happiness in him and sell. This approach has delivered proven results.

With evolving customer needs and emerging channel and content technologies, insurers have a great opportunity to improve their communication to build trust with their customers, deliver much better returns on their sales efforts and contain most preventable costs, while providing an experience that customers value. Are you up for the challenge?