ITIJ 191, December 2016
Mandy Langfield looks at the sometimes rocky relationship between the insurance industry and its customers, and asks what can be done to improve things
ITIJ 190 reported on the case of a British man who lied about the nature of an injury he sustained on holiday because he was concerned that his travel insurance didn’t cover horse riding. Paul Schofield had fallen off a horse, but informed his treating doctors that he had slipped and fallen in the street. He later died from internal bleeding resulting from a ruptured spleen. Arguments could be made that the doctors could have done a more thorough investigation of Schofield’s injuries at the time he was admitted, but equally if he wasn’t honest with them, and they believed that he had just slipped and fallen, they would have no reason to suspect a more serious injury had occurred.
This case throws up questions about the dynamic between customer and insurer – Schofield was worried that his insurance company wouldn’t pay his claim, hence his being less than truthful with the medics. It also shines the spotlight once more on the ignorance of the insurance buying public, who when it comes to the small print, often don’t know what they are purchasing.
Check the fine print
Much research has been carried out in the past demonstrating that a significant percentage of people do not fully read their policy documents – for any kind of insurance. Attempts have been made by insurers to improve the clarity of policy wording, but policy documentation can sometimes actually increase in length as a result, as jargon is removed. Policies running to 20 pages or so are clearly daunting for the average consumer, and thus it is common for policyholders not to know the details of their coverage. If someone is planning to go on holiday for a specific reason, a walking holiday for example, it might occur to them to check that a policy covers this particular activity, but often holiday activities are carried out on the spur of the moment. Quad biking on sand dunes in Australia during a gap year or jet skiing while on a beach holiday in the Caribbean are not uncommon activities, but are often not covered in standard insurance policies.
What, if anything, can insurers do to make it clear that customers must check they are covered before undertaking an activity such as jet skiing? Chris Blackman, head of product development for UK-based AllClear Insurance, says insurers can make policies more customer friendly, and the company has been making progress in this regard: “Recently [we] decided to make policy wording far more user friendly both in its layout and its design. Gone is the small contractual style policy booklet, to be replaced by an A4 policy brochure with icons helping the customer to easily identify what they are covered for and what they are not. Holiday imagery also gives it a far less daunting feel.”
Gone is the small contractual style policy booklet, to be replaced by an A4 policy brochure with icons … holiday imagery also gives it a far less daunting feel
Daniel Durazo, director of communications for Allianz Global Assistance USA, told ITIJ that every effort is made to make the benefits and exclusions clear at the point of sale, but that realistically it is up to the customer to read the policy they have bought. “It’s important to make clear what is covered by insurance and what is not,” he explained. “We urge our customers to read their policy and contact us with questions. We also offer a 10-day money-back guarantee for all policies, so if a consumer reads their policy and decides the product is not right for them, they can cancel it for a full refund. We feel that an educated consumer is our best customer.”
ITIJ also spoke to Paul Firkins, business development director at UK insurance broker Hood Group, about the role that intermediaries can play in bridging the gap between insurer and customer. He said that keeping coverage as transparent and straightforward as possible will help increase customers’ awareness of exclusions – and the fewer exclusions in areas such as sports and other activities, the easier it is for customers to understand what they’re buying and what is and isn’t covered. “As an industry,” he said, “we need to be very clear to the customer as to what is and isn’t covered and to use simple language that they will understand. This means avoiding jargon and being more innovative in looking at ways to get across important [information].” For example, Hood Group is exploring the use of short video messages as a way of informing customers of what its policies cover, and what they need to disclose.
Chris Noble, general manager of Australia-based World Nomads, said insurers have to take every opportunity given to them to connect with their customers: “You can’t rely on the booking path to convince travellers to read the policy documents, you have to educate at every stage of the travel lifecycle and leverage word of mouth to help inform.” World Nomads has looked to engage with their customers before and beyond the sale of travel insurance. Our travel Q&A service enables us to better understand the challenges our nomads face pre-booking, which allows us to design more flexible and relevant products; post-trip we reach out directly and through our social channels to ensure that our nomads are not just looked after, but better educated around the value of travel insurance.”
Carl Carter, deputy managing director of Voyager Insurance in the UK, gave ITIJ his take on the matter: “With the ongoing utilisation of mobile technology, apps, social media and the Internet, proactive insurers and product providers are presented with a wealth of opportunities to engage with their consumers prior to purchase, during the buying cycle and post purchase so as to improve their understanding of policies and travel insurance in general.”
Also, as an industry, insurers could discuss what exactly is meant by ‘hazardous activity’ – a topic that ITIJ has covered more than once in the past. “It doesn’t help the customer if insurers and distributors each have their own definitions,” said Firkins. “Distributors can certainly help to spell out the differences to customers, with price comparison sites being in an influential position to compare products beyond just price. Some progress has already been made in this area, but more can be done as it is in everyone’s interest to make it easier for the customer to understand what they’re buying.”
While surveys commonly show that alarming numbers of consumers don’t feel the need to take out travel insurance for whatever reason, there’s also evidence to suggest that travel insurance is a more important consideration than ever before. Research from Benenden, a UK-based healthcare provider, found that 34 per cent of British travellers don’t take cover for European holidays, but this means that the majority – 66 per cent – do buy insurance. Even among those young invincibles aged 18 to 24, 72 per cent do buy insurance before a trip. In New Zealand, Southern Cross Travel Insurance found that four-fifths of the country’s residents travel insured, while in Canada, the Travel Health Insurance Association (THiA) found this year that more Canadians are buying travel insurance than before. THiA credited the rise to growing fears over terrorism, civil unrest and the spread of diseases such as Zika; and its figures reveal that 78 per cent of Canadian travellers purchased cover in 2015, a four-per-cent increase on the previous year’s figures. Why would so many people buy travel insurance if they didn’t have some faith in the product – and the company providing it?
According to Durazo, the type of insurance is what matters: “I think it depends on the product. In the US, homeowners insurance and auto insurance are mandatory purchases and consumers generally understand them well and trust that insurers will cover their claims. For consumer specialty insurance products, such as travel insurance, the product is still fairly new and consumers have yet to develop an opinion on whether the companies that offer it are trustworthy. We believe that we have an advantage in developing consumer confidence because the Allianz brand is well known and trusted around the world.”
Globally, more travellers are investing in the peace of mind that insurance can bring. So, why the continuing underlying suspicion of some of the buying public that insurers are ‘just out to get your money’? According to Chris Blackman of AllClear, media coverage has a lot to answer for. “The press in general will find a ‘shock horror’ story of the poor consumer’s claim being declined, which will sell more papers than the story of someone having a claim paid normally – which as we all know is the norm! So there is disproportionate press coverage of claim declinatures. All too often, reporters take the side of the underdog claimant, conveniently omitting some of the material facts, which are the reason for the declinature in the first place.”
Firkins agrees: “The public’s trust of insurers is not where it should be and I believe this is largely due to the widespread reporting of ‘bad news’ stories. Let’s face it, when a travel policy pays out for medical treatment abroad and repatriates somebody back to the UK at a cost of thousands of pounds then nobody other than the insured gets to hear about it. This is happening every day and as an industry we need to get these good news stories out more widely in the public domain to balance out the few sensational headlines that appear when an insurer declines a claim. It’s not an easy task but that shouldn’t stop us trying. This same message has recently come across loud and clear from the Chartered Insurance Institute following the release of their Strategic Manifesto, which focuses on re-establishing public trust in the sector.”
technology has provided real benefits to both the business and consumer in terms of their understanding of travel insurance, as well as making life easier for all by managing expectations
AllClear is one of several companies making an effort to reach out to its customers in an attempt to improve their understanding of their policies and of the insurance world in general – these efforts include publication of real-life case studies and press releases that explain the importance of declaring medical conditions. Going online also means that customers aren’t daunted by page after page of small print that isn’t relevant to them. In the past four months, AllClear has introduced an insurance information/education tool, providing detailed information about travel insurance for travellers. Under the ‘AllClear Knowledge Base’ functionality, customers can type in their own unique question or search through hundreds of frequently asked questions to get the information they require. Blackman explained that the system also undergoes continual changes to keep up with what customers are demanding: “Whenever a new question is asked through the knowledge base or through our WebChat facility, we add that question and response to the searchable database so that future customers can find it. Our ongoing aim is to educate the customer into obtaining the travel policy which is right for them and to provide as much information as possible so that they can make the right choice.”
As Carter notes: “This use of technology has provided real benefits to both the business and consumer in terms of their understanding of travel insurance, as well as making life easier for all by managing expectations when they come to use their policy or make a claim.” Things have moved on considerably from the ‘commonplace’ static FAQ pages of the old days, and the insurance industry has benefitted hugely from using a wide variety of communication and educational techniques. For Voyager, these range from routine blog commentary around what travel insurance is (and isn’t), through to real-time social media posts and tweets giving advice on events such as natural disasters, financial failures and evolving security issues ‘live as it happens’. “We have also found consumers respond very well to SMS texts delivered alongside policies that help them understand their policy,” said Carter, “making it readily available when they need it, and particularly [during] the claims process. Examples include the dispatch of contact numbers, ‘how to make a claim’ links and contact details by SMS, [which] have proved very popular with a great degree of utilisation.”
Clarity and quality
“AllClear believes that providing clear unambiguous information, combined with a choice of a panel of insurance providers that offer cover for pre-existing medical conditions declared by the consumer, represents the kind of service to customers which improves the way people view insurers and therefore contributes to a higher level of trust in the industry,” concluded Blackman. Offering good quality products with clear benefits and exclusions will enhance consumer trust, and while cost is still a factor for some customers, many are now beginning to cotton on to the idea that in life, and insurance, you get what you pay for.
According to Firkins, working hard to get customers good value for money is key: “Our approach to working with affinity brands such as retailers and lifestyle organisations is to ensure that their travel insurance offering reflects their core brand values. This doesn’t mean being the cheapest. It’s about offering quality products that represent good value. Brands that are recognised for this ethos will attract customers as trust starts to come into the equation of selecting a policy.”
Carter concluded: “By engaging, educating and being transparent with the consumer, well in advance of, and through all phases of the travel insurance cycle, we have found this increases customer satisfaction as proven by consumer feedback reviews, and leads to increased brand loyalty and repeat purchase. ⬛