Trust As An Innovation—A Communication Lesson From The Florida Insurance Industry
By Maria Ferrante-Schepis (formerly Umbach), based on an interview with Barbara Peat, CMO for Bankers Insurance in St. Petersburg, FL
If a tree falls in the woods and nobody hears it, did it make a sound?
If insurers send information to the public and nobody understands it, did they actually communicate?
Depending upon who is doing the judging, these questions could be answered differently. Many insurance companies would cite the long lists of communication devices, correspondence, websites, brochures, etc., as proof that there has been communication.
Communication, however, is the act of transferring information from one source to another. If the transfer is not complete, the communication did not take place. The understanding and possibly even retention is the proof that the communication did take place.
Michael Maslansky would call this the “failure to communicate.” He has spent more than a decade researching the use of words, language, symbols and other communication techniques to help develop “The Language of Trust.”
The insurance industry is not among the most trusted industries in the U.S. Strategy One executives talk about the 2010 Trust Barometer in industry. It just so happens that the insurance industry is ranked the lowest with, not surprisingly, technology at the top. Why? Consumers expect the invention of new, valuable products, services and business models. And they trust industries that are able to deliver.
While there are other factors involved, it’s apparent that if the public understood what makes the insurance industry run and the value it creates for them, public sentiment would greatly improve without much else. Experience may improve as well: not just the customer experience, but also the industry’s experience with claims and profit.
The key ingredient is the understanding that the customer’s behavior has something to do with the price that is paid, or the benefits that may or may not be paid. That’s the biggest disconnect.
And Florida is becoming the poster child for how consumer experience and company experience are linked.
Here Are Three Recent News Articles That Discuss Trends Impacting Florida In A Big Way:
- Some consumers are behaving badly—The number of staged accidents increased by 46.3 percent from 2007 to 2009, with Florida being the biggest driver. Some policyholders see insurance company claim money as an opportunity, not realizing that their behavior drives rates up and benefits down.
- Insurer profitability and solvency is in question—There’s actually an expectation that some smaller insurers are likely to fail in the state of Florida. Literally, many are not capitalized well enough to weather storms. While storms are not controlled by consumers, the lack of tolerance for rate increases and appropriate pricing may be driving some of the insolvency issues for smaller insurers who feel they cannot compete.
- Legislators don’t necessarily get it either—Floridians think Gov. Charlie Crist didn’t act in their best interests when he vetoed a bill that would have helped contain the costs of insurance. The bill would have required Floridians to pay more, but they were actually willing to!
The above are all symptoms of the one problem: poor communication.
So What’s The Opportunity For Insurance Companies To Create Trust Through Better Communication And Understanding?
- Get consumer insights—Distributor insights are good, but they aren’t enough. It’s one lens. Understanding the consumer deeply is the first priority in cracking the code.
- Develop ideas that get to the heart of the communication issue—Try on new words, metaphors, visuals and thought paths to describe what insurance is. Make consumers aware of their own involvement in the process. Bankers Insurance is one of the first to respond to the need through innovation: “We will be launching Build Your Own Policy (BYOP) in catastrophe-prone states in the next few months. BYOP was designed to help consumers have clarity, choice and the counsel they wanted from their agents. Consumers reported that they did not understand what they were buying and it’s hard to assign value to anything you don’t understand. Transparency and clarity of insurance terms was even more challenging than I expected, due to the number of lawyers who have been involved creating the terms and explanations we use…clearly they have not read Michael Maslansky’s book. I’m proud of the work we’ve done, but recognize it is just a good beginning. I’m counting on a lot of feedback and help from our customers to make it even better.” —Barbara Peat
- Make sure there are some outsiders involved—Don’t be afraid of different perspectives. People who are on the top of their game in another industry may have discovered solutions to similar problems but aren’t invested in an idea for your business. Health insurance is a great example: Consumers would potentially pay less for it if they proactively managed their own health (good read for a related yet outside perspective on American health care spending, “Bend the Healthcare Trend,” Borislow and Gaunya).
- Test the ideas…again with consumers—A good litmus test for gauging the effectiveness of your communication is the Reverse Elevator Speech. Simply put, if you are able to boil down your value proposition into a statement that can be said in an elevator, it’s only half the battle. You must know what the consumer has said about you after you leave the elevator! If it matches, you’ve nailed it. If it’s even a little askew, there’s more work to be done.
- The ideas that test well must be brought to market well—The right attitude, the right media, the right timing, the right reach and the right call to action. If the to-market part of the process is not executed properly, the best ideas will succumb to failure.
No easy task, but the process of innovation makes creating new products, services and business models more predictable and gives a solid road map for stacking the deck in favor of innovative ideas. Who else will step up and take the challenge?