Post Blog: Does insurance have to be so complicated?

Insurance is complex by its nature. That's a fact. But it would seem that the industry is not making it easy for its customers either.

Siegel and Gale's annual Global Brand Simplicity Index revealed that consumers view general insurance brands as the least simple in terms of communications and customer experience in the UK, ranking 25th out of 25 industries.

The report highlights that many insurance brands make it more difficult for themselves by failing to make life easy for customers.

The only time the majority of the general public interact with insurance companies is when they purchase a policy, or when something goes wrong and they need to make a claim.

So, when you couple unfamiliar terminology with complex terms and conditions, it is not surprising that consumers are left bamboozled and frustrated by the experience - there appears to be a significant complexity barrier between the public and the insurance industry.

The index highlights how complexity has a serious negative impact on business success. Simplicity equates to loyalty and the results speak for themselves: 87.7% of UK consumers are more likely to recommend a simple brand.

In fact, consumers are prepared to pay a premium of up to 5% for simple brands, meaning that the insurance industry alone is leaving up to £506m of potential revenue on the table.

Siegel and Gale's findings make for uncomfortable reading for many of the major insurance brands. Aviva ranks 110th out of 122 brands, rated the worst performing brand in the general insurance sector, with consumers complaining of confusing price plans and poor customer experience.

However, Allianz fared better, which may represent an attempt to simplify its strategy, but still only ranked 82nd - not great.

So, why are insurance companies getting it so wrong? In most areas of insurance consumers rated their experience lower than six out of 10, which Siegel and Gale considers ‘complex'.

This included everything from understanding their bill (rated at 5.95) to selecting the right cover for their needs (5.56). The worst culprit is policy documents, which consumers have a very tough time comprehending, scoring only 5.3 out of 10.

The only good news is that getting a quote seems to be relatively straightforward, scoring 6.23 out of 10 - the only area with a score higher than six.

Simplicity is defined as ease of understanding, transparency, usefulness of communications and complexity of typical interactions in relation to industry peers.

It seems these virtues are getting lost behind industry jargon and garbled communications in the insurance industry, which in turn feeds a feeling of confusion and mistrust. This is only likely to complicate an already complex industry.

The lack of simplicity across the industry isn't restricted to the UK. It's a global issue. Fortunately, some insurance companies have recognised the need to simplify how they deal with customers.

In the US, for example, financial services consultancy Novarica found that most companies are looking to invest in technology to improve communication with consumers. UK firms need to follow suit and make use of the technology at their disposal.

Ultimately, it was the companies that put technology at the heart of their business that triumphed in this year's rankings. It would be unfair to directly compare the insurance industry to the major success stories such as Google, Amazon and John Lewis, where the link to technology is perhaps more natural.

However, the insurance industry could take a huge leap forward not only by simplifying its processes and the messages that it broadcasts to consumers, but by doing so across the many touch points that they interact with on a daily basis.

The opportunity to simplify is significant: clear, credible and consistent communications send the correct message. But to achieve success, insurance brands must target what really makes a difference to their customer's worlds.

Everything from statement design and the language used in terms and conditions, to call centre handling and advice, to website experience, need to be simplified and better connected to add real value.

Make it easy for customers to speak to someone who is knowledgeable and able to help via whichever channel of communication they prefer. Ensure that documentation they receive is clear, useful and rewarding.

Put things in black and white first and then add the colour. Design your experience the way you'd want it. It's pretty simple when you think about it like that. The answer is clear: simplify your business and reap the benefits.

Philip Davies
President, EMEA, Siegel and Gale