Canadian regulators say travel insurers must do more to educate consumers – but how?

Canadian regulators say travel insurers must do more to educate consumers – but how? | Insurance Business Canada

Canadian regulators say travel insurers must do more to educate consumers – but how?
by Lucy Hook

When it comes to travel insurance, there is a misalignment between consumer expectations and industry practices, and insurers must do more to educate consumers, Canadian insurance regulators have said.

In a recent paper, the Canadian Council of Insurance Regulators (CCIR) Travel Insurance Working Group stressed the responsibility of insurers to help consumers better understand travel products, assist them with decisions, and meet their fair expectations of coverage.

“Insurance and financial companies are not inherently good at communicating with consumers,” Robin Ingle, chairman of Ingle Insurance, a Canadian travel insurance company, told Insurance Business.

This is due to a combination of regulation and fear of legal consequences, and also because insurers tend to focus less on communication and more on compliance, capital management and risk management, Ingle said, adding that the problem is a global one, and not just limited to Canada.

Financial institutions need to explain their products, including the good and bad aspects, to help inform and empower their customers, according to Ingle, and by doing this firms can gain a marketing edge but also avoid media, regulatory and legal issues.

“Having a glossy ad is not communicating,” Ingle stressed, but helping to build positive financial literacy capability in purchasers and consumers benefits the whole industry.

“Today, with the digital environment and social media, insurance companies need to become proactive and authentic. They need to be bold and clear with their coverage and manage expectations,” Ingle said.

This is beneficial not just to the consumer but to the insurer themselves – as negative media coverage is often the result of disgruntled claimants who may not have properly understood their coverage limitations.

When it comes to the media, insurers often fail to respond to enquiries over unpaid claims because of fears over privacy issues or regulations which may leave them open to attack, Ingle said.

 “The issue is communication, clarity, financial literacy and learning how to respond to media with accuracy, but not void privacy or regulation,” Ingle explained.

However, when it comes to the client being informed, consumers must also be ‘part of the solution’, Ingle said, and take on some of the responsibility for educating themselves by reading and learning.

Ultimately, as much as travellers need insurance, so too do insurers need policyholders. 

Because of this, “smart insurers” will communicate well, help consumers understand, be clear in their wording, and respond to questions by being transparent, Ingle said.

“Insurers are not perfect but they also face media, government, customers and legal issues if they act unfairly – so it’s in everyone’s best interest to teach, understand and respond properly to consumer issues.”

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