'Simplicity warriors': Consumers demand understandable insurance documents
Don't feel stupid if insurance forms and documents leave you scratching your head -- you're not the only one who's confused by all the gobbledygook.
Finance and insurance are the most complicated aspects of daily life, according to the "Call for Clarity Survey," released by Siegelvision, a communications and branding firm in New York.
More than half of consumers say they have trouble understanding information from insurance companies such as life insurance statements and explanation-of-benefit statements, or EOBs, the documents health insurers must send to explain how, why and whether a health insurance claim was paid. And the vast majority finds insurance information too time-consuming to read.
"It's never going to be a simple topic," says Seigelvision Chief Clarity Officer Irene Etzkorn. "But it could be expressed more clearly."
Lost on the basics
Even the most common insurance terms are puzzlers. The survey found that 78 percent of consumers are unfamiliar with such basics as deductible, policy endorsement, rider and accelerated death benefit.
Etzkorn is also co-author of the book Simple: Conquering the Crisis of Complexity with Siegelvision CEO Alan Siegel. A longtime champion of communicating in plain English, Siegel led branding consultant firm Siegel+Gale for four decades before launching Siegelvision.
The authors' website, callforclarity.com, calls on consumers to become "simplicity warriors" and demand clarity from businesses and the government. It features a blog as well as links to state regulators and consumer advocacy resources, and asks readers to post their sightings of clarity (or complexity) on Twitter using the hashtag #callforclarity.
The survey showed that people are indeed fighting back, Etzkorn says. More than a third of respondents, 36 percent, said they complained about a confusing product or service. Websites and social media are providing a broad array of channels to do so:
- 48 percent complained to companies directly online.
- 16 percent wrote a bad review on a website.
- 10 percent posted complaints on Facebook or Twitter.
Companies should pay attention because confusion and can lead to loss of sales, goodwill and trust, the firm said.
And the awards for most incomprehensible goes to . . .
Finance documents and terms topped the list of the hardest to understand information, followed by communication from insurance companies. The top 10 most confusing types of information and the percentage of consumers who find it bewildering, according to the survey:
- Mutual fund prospectuses, 64 percent
- Mortgage terms, 61 percent
- Federal tax instructions, 59 percent
- Life insurance and annuity statements, 55 percent
- Explanation of benefits forms for health insurance claims, 51 percent
- Auto leases, 51 percent
- Health insurance enrollment information, 50 percent
- Click-through agreements, 50 percent
- Extended warranty for a product, 41 percent
- FAFSA financial aid application for college, 41 percent
Nine in 10 consumers, meanwhile, find health insurance enrollment too time-consuming to read. Eighty-seven percent say the same for insurance and annuity statements, and 85 percent say it takes too long to wade through a health insurance explanation of benefits statement.
"Insurance jargon and complexity make consumers question whether the policies they purchase provide the coverage they need," Etzkorn writes in the survey report. "For prospective customers it may be so intimidating that they give up."
Of all the sectors of the insurance industry, health insurance is the most incomprehensible, Etzkorn says. Although health care reform was supposed to make it easier to compare and understand health plans, consumers -- especially young people -- are as confused as ever.
The survey found that 86 percent of people 18 to 24 are unfamiliar with health insurance enrollment information, and 85 percent find it difficult to understand. Among consumers ages 18 to 34, 83 percent do not understand explanation of benefits statements.
What can insurance companies do?
The first step is simple: Empathize.
"They need to put themselves in the shoes of the consumer," Etzkorn says.
Consider the term "deductible," for instance. If the industry had been thinking from the consumer's perspective, it would have used a different word, such as outlay, Etzkorn says. The deductible, after all, is the amount the consumer pays out of pocket for an insurance claim.
Simplifying and personalizing documents so they include only the information applicable to that customer would help make things easier to understand, too. Context is important -- documents often present information in a linear, legalistic fashion. Instead, the information most critical to the consumer should be presented first, Etzkorn says. Electronic documents should include helpful links to definitions and illustrations. Standardizing insurance plans and keeping the number of choices to a reasonable level would help, too.
"Some insurers offer 90 varieties of plans," she says. "It's too much for consumers to take in."
Some companies are making progress. Some health insurers have eliminated confusing medical codes and jargon from EOBs.
Dalbar Inc., a finance and health care market research firm in Boston, last year highlighted Humana, Aetna and Blue Cross Blue Shield of Michigan for making their statements easier to read. Humana, for instance, includes dental and prescription information in an at-a-glance view, shows the math involved in calculations and explain terms effectively, said Dalbar, which issues an annual report on the effectiveness and readability of EOBs.
Among property insurers, companies such as State Farm and Allstate have created mobile apps that put easy-to-understand and useful information at customers' fingertips.
Still, the industry has a long way to go, and, if Siegelvision has its way, consumers will be pushing it in the right direction. The Call For Clarity website says: "The simplicity movement won't be led by those who fostered complexity in the first place. It's up to the rest of us to demand clarity from companies and government."
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