Insurance is a lot like the Force in Star Wars. It’s part of everything but it’s invisible, and those who know most about it are from other generations. Insurance protects us from the everyday risks of life. Insurance provides the safety net in nearly every industry. Just like innovative ideas, insurance gives individuals and families a safety net and a way to prepare – and pay – for the unexpected. In the wake of a tragedy, having insurance provides peace of mind. The value this peace of mind offers goes through the roof. But the comfort in knowing you’re covered is there all the time.
There’s microinsurance – coverage focued on protecting people with lower incomes and mainly engaging in petty trading. Insurance organisations provide coverage for crop or livestock issues, illnesses and diseases, and natural disasters – and new technologies are making these strategies more effective every day (insuremypath).
Against all the above, some sections of the people still do not pay attention to insurance. Others have made a strong claim that if it were not for the police, they would not have done even the compulsory car insurance. What is accounting for this? We spoke with a section of the public and they provided us with the following reasons below as to why they are not so enthused about insurance products in this country.
What can the insurance industry learn from this? Insurance companies need trust and honesty to win more people and grow their businesses. Insurance companies sell promises, and that is why trust and integrity should be number-one in their core values. The reasons have been outlined below :
- The Bulky nature and small fine-print of insurance policies are among the reasons why people are not interested to take insurance policies. Most people have complained that the bulky nature of most insurance policies makes them difficult to read. You might think it’s funny, but people also complain they are also written in small print, making it difficult for the ordinary Ghanaian to grasp the meaning of the whole content.
But the fascinating thing is that the increased claims, lawsuits and regulation have pushed insurance companies to make the contracts denser, making them even more difficult to read for the average policyholder.
Insurers can begin adding a policy summary to the main policy. A policy summary is an abbreviated overview of the key aspects of an insurance policy. This can include the premium amounts, coverage limitations, conditions and other details. The insuring public should also begin to use the services of insurance brokers, who are professional insurance intermediaries. They can give professional advice to policyholders.
- Insurance is a legal contract and most people have complained about the difficulty in understanding or comprehending what the policy intends to communicate. Insurance policies are not written in plain and simple language. They are a legally binding agreements and contains legal wording, clauses, terms and conditions which need legal interpretation. Miller says years ago insurance contracts were easier to understand. But over time new laws, regulations, court cases and differing opinions started adding complexity to the contracts. In other words, insurance contracts are complicated because they have to cover all their bases in case of a lawsuit or a large claim. Can a simple interpretation in plain language be added to the main contract for easier understanding by the policyholder? Innovation is key in this regard.
- The difficulty in making a claim results from the need for a lot of processes and procedures, and also provision of a lot of documentation – which is a great hinderance to a lot of people taking out an insurance policy. Most people see taking out insurance as less easy than making a claim. The processes and documentations are too lenghty. The process of gathering all the documentation to support a claim is also always left for the claimants only. Insurers do not play a role in helping to obtain any of these documents, or bear any cost in the process. Most of the documents requested at the time of claim could be demanded at the underwriting stage. When underwriting is done properly, the claims process becomes easier.
- Insurers’ over-reliance on other institutions when it comes to claiming – the insuring public also believes that insurers always rely on other institutions before they meet the claims of their customers. All the documents they require before claims are paid are generated by third-party institutions. This has also made these third-party institutions very powerful, knowing the importance insurers place on their documents to pay claims.
Insurers need to be very proactive and take an interest in all incidents which could lead to potential claims, and then have their comprehensive report done. For instance, investing in motor accident research and reports will help insurers have enough information to base their claims payment on.
Again, we could also help regulate and promote Insurance Claims Intermediary Firms – which could represent claimants and take certain regulated fees. This could take the hassle out of going through the claim process for the insured. I know we have insurance brokers, but they tend to represent their clients; what happens to third-party claimants, and also most life policyholders, since life is sold mainly by agents. This can be discussed further in one of our subsequent articles.
- Mis-selling has become a huge barrier to people taking policies now – most especially in the life sector. Most of the insuring public have found themselves victims of mis-selling. The main reason why they signed the policy is found to be otherwise when something happens or it’s time to make a claim. Insurers can deal with mis-selling by quality assurance. It might be very costly and time-consuming, but it will be better for the insurance companies and the industry.
- It could be a myth, but most of the insuring public believe insurance companies hide or have a tendency to hide certain terms and conditions in the policy. They are very much aware of the implied conditions in the policy. The insuring public also believes insurers are always silent about the claims conditions and documentation in the policy. Claims processes, procedures and documentation should be stressed and highlighted during the underwriting stage. Most importantly, how the claimant can seek redress should also be made known at the underwriting stage – whether from the regulator or the Insurers’ Association. This breeds confidence and trust in your services.
- The demand for a lot of documentation at the time of claim is also another hindrance or deterrent to people taking out insurance. An insurance company ask for the death certificate and burial permit together to prove that a death has occurred, while one document would serve this purpose. Most insurers have made these documents part a checklist demanded from claimants.
- The sharp change in customer service at the time of insuring compared to making a claim is something most of the insuring public find so fascinating. Insurance companies’ staff become hostile toward clients the moment a claim is reported. Claimants are in most cases prevented from meeting managers or senior officers – whereas if they were presenting cheques for payment of premium they are be allowed to see the Managing Director. A claim is a marketing tool, and insurance companies should see it as such. A claim is a process, and communication throughout this whole process is an essential key to the claimant’s overall satisfaction.
- Most people have to bear the initial cost of repair, purchase of replacement items, reinstatement, payment of medical bills, and the cost for obtaining all other documents necessary to make the claim… such as police reports, medical reports, etc. Bearing the cost immediately yourself is a big issue for most of the insuring public. They believe insurance brings peace of mind and helps you when you are in distress – but more stress is added when you have to go through the insurance claim process.
There is more financial burden before one can make a successful claim. This simply means you need money to make a claim even though you are already down with the risk which has been transferred. What happened to emergency treatment in motor insurance? How well is it working? Can this be revised to take care of the initial emergency cost? Most drivers have issues with this when they have to bear all the initial costs for the pedestrian in hospital when they knock someone down.
- There are a lot of ‘we will not pay’ clauses in the insurance policies. There are a lot of conditions underlying why an insurance company can refuse the payment of a claim. This makes most of the insuring public believe that insurers are only interested in making money but not the welfare, protection or safety of the insuring public. How can insurers better explain their policies to the public? There has to be enough public education and also sponsorship for insurance education firms. Professionals should be encouraged to form public insurance education firms. These institutions would help the general public to understand most of the terms, conditions, clauses and exclusions, etc.
Insurance is essentially there to provide peace of mind, security and protection to individuals and companies from the fear of things going wrong. Insurance also helps individuals build wealth to meet specific needs in the future. How do you reconcile the peace of mind insurance is supposed to provide and the hassle or stress one has to go through to get this peace of mind?
The public needs trust and confidence in the insurance sector. That’s why the National Insurance Commission’s overall aim is to work with all insurance industry players to increase insurance penetration; and to do this, they need to build and enhance public trust so that when consumers purchase insurance products and services they can be confident these products do exactly what they say they will.
The writer is a Chartered Insurance Practitioner in the United States of America, United Kingdom and Ghana +233208498571. [email protected]