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 Health & Beauty | August 2006 
Mending Fences with the Public
 Trish Tervit - canadianunderwriter.ca
i>Clear policy literature and taking enough time to explain policies to consumers should help improve the industry's public image.
Last month, Canadian media aired a segment about a man who fell from his seventh-floor hotel balcony while vacationing in Puerto Vallarta, Mexico. Both legs and his pelvis were broken and his parents were shown crying because they couldn't afford to pay for either his medical flight home and hospital bills.
Jason Campbell had travel medical insurance - but the insurer wasn't paying because of a clause in the policy that stated if alcohol was involved in an accident, then the insurance company wasn't obliged to indemnify him.
The insurer was mentioned by name three times during the first broadcast about the story that aired on national television. Other media outlets chose not to mention the company name and no one was ever interviewed from the insurer.
A letter to the editor in one publication expressed outrage that the insurance company wouldn't cover the medical expenses. "The company walked out on its obligations," Paul Gingrich wrote to Kitchener-Waterloo's daily newspaper, The Record.
This isn't the first time media aired news that portrays insurers as The Big Bad Wolf. And it won't be the last.
But it seems in recent years insurance's image has taken a particularly brutal thumping. How did this happen?
HARD MARKETS BREED CRITICS
A hard market always leads to criticism, and the hard market in 2001 was no exception. Things were already precarious for the industry when the planes flew into the World Trade Centre towers on September 11, 2001, but the events of that day sent shock waves through financial markets around the world and ultimately changed the face of insurance forever.
Suddenly, insurers couldn't rely on well-performing investments to help generate profits. At the same time, governments cut back on health care funding, putting more pressure on insurers to pay rehabilitation and medical costs.
Insurance companies had to reduce costs drastically. They stopped insuring riskier prospects and pulled out of markets that did not offer quality return on investment. Auto insurance premiums jumped and capacity fell.
News stories about daycares and volunteer fire departments closing down because they couldn't get insurance coverage started to hit the six-o'clock news. Insurers said it was necessary to keep from going out of business, but the explanation didn't seem to carry any weight with the public after 2003, when there was an economic turnaround and media reported huge profits in the industry. The public's skepticism could be felt everywhere.
One of the fundamental problems in a hard or soft market is that insurance companies are selling a product that consumers often resent paying for and in some instances are obligated to purchase by government legislation.
Carol Jardine, the chief operating officer of Canadian Northern Shield Insurance Co. and senior vice president of CUMIS General Insurance, recognizes this as a major obstacle for insurers.
"The industry naturally has a challenge with consumers because they are purchasing a product they don't want to use or buy. They don't understand or enjoy purchasing it."
Insurance isn't tangible in any form if a claim isn't being made, and so therefore frustrated consumers begrudge writing their annual policy cheques.
CONSISTENT FAIRNESS
Kathy Bardswick, president and CEO of The Co-Operators has no illusions. "We will never be wonderfully loved."
She says the public inherently mistrusts the industry and she doesn't fully blame the cycle. Consumers just don't understand the principles of insurance and the industry is to blame for that.
"We haven't historically worked hard at stomping out the confusion and reaching out to clients consistently and constantly."
Jardine agrees, adding that regaining consumer confidence is about being consistently fair.
The Insurance Bureau of Canada (IBC) has recognized the need for a unified industry message. In the December 2005 issue of Canadian Underwriter, IBC's vice president of public affairs and marketing, Mary Lou O'Reilly, outlined the bureau's Restoring Consumer Confidence initiative, which involves grassroots outreach and safety education. The article also highlighted the October launch of the IBC's National Injury Prevention Campaign.
Bardswick likes the IBC's initiative. At the same time, she thinks there is more room for insurers to help build a positive image. The IBC's initiative to restore consumer confidence is "clearly not enough" she says. "A broader effort is required."
The first item on her "to-do list" is to build and strengthen partnerships with brokers, so the industry's messaging to clients is consistent. Granted, this is not easy to do when the broker has an angry client in his office and the broker is looking for someone to blame for the client's cancelled policy or increased premium. But Bardswick says it just doesn't pay to point fingers of blame.
Next on her list is to increase education and community understanding of the industry. The Co-operators, for example, has recently conducted a series of meetings in five cities across Canada with community advisory groups. The groups meet to discuss insurance issues and include community leaders such as school principals, doctors, and professors. Bardswick said The Co-operators started this activity because it was time to listen to the concerns of people and to begin dialogue. "We've got to spend more time communicating and educating," Bardswick said. "It's not good enough to only touch a client on renewal."
Bardswick says insurers need to provide more complete disclosure at the point of sale and "do a better job of stripping out legalize." This means, for example, that brokers and other distributors would explain the policy in clear language to clients at the point of purchase and at every other opportunity.
Distributors should also be educated about the important clauses to point out to customers, Bardswick said. Often times travel insurance is purchase through bank tellers or travel agents, who are not necessarily experts in explaining the documentation.
EXPLAINING POLICIES
Of course, the onus is on the insured to read the policy. Nevertheless, many people don't understand policy wordings even if they do read them. It was unclear in the media reports whether Jason Campbell read his policy or not. Chances are that if it had been explained to him at the outset that drinking would void his travel insurance, he probably would have been more careful when he was partying. The news story then would have been about Campbell's lack of judgment and not that the insurer was horrible for not paying his bills.
So what can you do as an insurer, broker or distributor? First of all, simplify the policy language. Hire professional writers, not lawyers, to write your communications materials. Use communication professionals who believe in the power of simple language.
Second, don't try to ignore or hide from the media. Instead, use the media to your advantage. Proactively pitch them industry good-news stories that aren't self-serving. When - or preferably before - disaster strikes, establish a media relations strategy and implement it as soon as possible. One alternative, for example, may be to offer media - including photographers - the chance to spend a day with a claims adjuster while they visit claimants.
Image is often defined in moments of crisis. Specifically, the public will often form its perception of the company based on how that company responds to a crisis. Remember Johnson & Johnson's quick reaction to the famous Tylenol tampering? They were quick to comment and moved swiftly to rectify the problem. Doing the right thing may not make lawyers happy, but it can make for an improved public image.
Third, if you want community relations coverage, do something extraordinary. Don't expect reporters to come running if all you do is donate money to charities. If you go above and beyond this activity, you will get noticed.
Fourth, train executives in media relations and get them speaking publicly at engagements and community functions. Teach them how to provide good, understandable quotes and explanations.
Fifth, make sure your brokers are on your side. Insurers and brokers should be working together as partners in helping to explain industry issues to their clients.
Sixth, tell the truth. Members of the media and the public can easily detect a liar. Besides, it's easier to remember the truth.
Don't expect an overnight transformation if you employ these tactics, but using clear messaging on a consistent basis may provide a desired long-term change. Take advantage of every opportunity to help your customers understand why and what they are buying from you. As Bardswick says: "If you look at what industry does every day, we physically touch so many Canadians either face-to-face or on the phone, millions. And I bet you we lose so many opportunities everyday to get some information across to them."
Industry experts agree it's time to make a change. |
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