Tales of the expected

Following the result of the well-publicised Business Interruption (BI) test case appeal, Ant Gould considers how we as an industry can better manage that reputation-damaging gap between customer and insurer expectations.

I have spouted forth many times, when invited to, about the need for the insurance market to be proactive in setting customer expectations or continue to risk falling short of customers self-set expectations.  As such I was very heartened to hear this same message coming out loud and clear from a Chartered Insurance Institute expert panel last week.

There is, and has been for many, many years, a huge reputation-damaging gap between an insured’s expectations of their insurance policy and an insurer’s expectations, no matter how comprehensive or not a policy may be.  The Business Interruption debacle may not be an ideal example – as a pandemic was not on most people’s list of expected perils – but it has helped to highlight the missed-beat in expectations of policyholders, but also one of the reasons for this gap.  A seeming inability to make coverage limitations clear, to respond quickly in the event of new perils, and to communicate those limitations in an engaging and relevant way.

One excuse, sorry reason, often put forward, and which does have some merit, is that insurance is a legal contract, and so by necessity it is not always that straightforward. Fair point. But insurance is based on a promise to pay and therefore it’s essential that both sides of the contract, the customer and the insurance provider, have clarity of what is and isn’t covered.

It is not just an issue of plain English, or clarity of wording – it is an issue of communication. And whilst the insurance market has improved its communication immeasurably in recent years, driven by an array of missives from the Financial Conduct Authority,  the fact remains that if the boundaries, limitations or reasonable intentions of an insurance policy – be that for a mobile phone, a car, or a small business – are not spelt out, are not clear, and are not communicated well and, dare I say, regularly, then the customer will quite naturally, presume it will cover most reasonable – to them – circumstances.  From dropping a phone down the toilet, to driving into a car park bollard to, well… a pandemic.

And it is this failure of communication that lies behind the market’s unfairly deserved small-print obsessed reputation.  If the insurance market is clearer in defining what is covered, or ideally what isn’t, then it will be more confident in finding engaging ways to communicate this message, playing a vital role in setting expectations which it will then, in the main, be able to meet and often exceed.

But poor messaging leaves the customer to set their own expectations – and they will be naturally higher and less realistic.

So, whilst the quality of an insurance policy is of course essential, the need to reduce the width of misunderstanding of what it is for, is of equal, if not more importance, and key to building, maintaining and restoring trust.

Effective communication follows in the wake of obtaining clarity about what you want to say and to then communicate it clearly and engagingly.

So, if you need support communicating with your key audiences, talk to us today.