The financial sector is having a hard time reestablishing its street cred.
Following the 2008 financial crisis, Americans remain wary of major financial institutes like banks and credit card companies. Congress has tried to remedy the damage by enacting legislation that would introduce simpler language in financial policies to help people understand and trust what they’re reading.
Insurance is adopting the same tactic to help build relationships with consumers and producers alike. In an effort to promote simpler language in its personal insurance policies, Nationwide
is throwing out phrases like “in order to expedite payment” in favor of “for faster payment.”
Mark Pizzi, Nationwide’s president and COO, told Insurance Business
doing so will create a bond of trust between the carrier and its clients.
“Insurance is complex. Most consumers have a limited understanding of insurance, including how it works, what’s covered and what’s not covered,” Pizzi said. “For consumers, [simpler language] takes the guesswork out of knowing which items they own are covered and which aren’t. It also gives them peace of mind of knowing what coverage they have, so they can determine if they need more or maybe less.”
Pizzi said the move will also benefit producers—and their pocketbooks.
“For agents and brokers, simplified language would make the job of explaining coverages and policy terms easier, which equates to a better customer experience, which leads to more sales for agents,” Pizzi said. “We feel that everyone wins with simpler insurance language.”
The push for simpler language came after Nationwide conducted a survey of 1,600 Americans with property/casualty insurance policies. Roughly 57% told the carrier they knew more about their favorite television programs than about their insurance policies. Another 40% said they had read their entire policy within the past year, though only one in five said they completely understood it.
By and large, respondents told Nationwide they found their policies too long and complicated to understand.
Nationwide can enact most of its changes to policy language on its own. However, others require legislative approval that the insurer is seeking to obtain. Pizzi is upbeat about the progress the carrier has made, however.
“We haven’t received any negative pushback from legislators or regulators,” he said. “We think they all understand the importance of making insurance policies easier to understand. We just have to make those changes in a way that everyone’s concerns have been met, and that takes time.”
Pizzi said Nationwide has efforts under way in several states to implement the new language, and are getting the conversation started in others. Eventually, Pizzi hopes all policies will be written in a more simplified manner, but anticipates that personal lines like auto, homeowners and renters insurance will be the first policies to see changes.