It’s important that financial institutions make their information and services as clear, accessible and understandable as possible. Making the complicated seem simple is vital for public engagement writes Natalie Binns, head of insurance solutions at Rest.
Group insurance is one of the most important components of superannuation. It can provide working Australians with access to affordable insurance, including those with preexisting medical conditions or casual work patterns.
But there is still plenty of room for improvement in the use of plain language.
People are increasingly becoming used to interacting with apps and other digital technology dedicated to making life simpler. Making the complicated seem simple is vital to improving public engagement.
With the Australian Government and the Productivity Commission report proposing to shift group insurance to ‘opt-in’ for members younger than 25 or with low balances or inactive accounts, it’s vital that funds and insurers take steps to increase engagement.
We run the real risk of hundreds of thousands of Australians being left uninsured. People with preexisting medical conditions would be unlikely to have any access to affordable insurance.
One often-touted solution is standardised versions of our current, complicated definitions. This was one of the recommendations in the final report of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. But is this the best way to increase engagement and understanding?
The modern insurance contract contains thousands of words. To add to the complexity, many words have non-standard meanings contained in a glossary at the back of the document. For example, for the average Australian to understand whether they’re even eligible for insurance, they must understand a mix of employment conditions and criteria with very specific meanings.
Standardising a single set of complicated terms, without attempting to make them more understandable, will not necessarily improve consumer engagement.
This complexity of language has been a key focus at Rest.
We ran a series of workshops to create a deeper understanding of how our members interact with life insurance. Throughout these sessions, it was clear that the terms we use as an industry just don’t resonate with the public.
For example, the term ‘gainful employment’ was commonly met with the question, “I’m employed, what does that ‘gainful’ bit mean?” The term ‘waiting period’ was met with, “If I am paying, why do I have to wait?”
However, when terms were broken down into simple concepts, the engagement and advocacy levels changed drastically. Instead of the typical definition of income protection cover, we explained it as a replacement of your salary when you’re sick or injured, until you go back to work.
The common response from members was that this was one less thing they had to worry about. In fact, more than 60 per cent of members were pleased to know they had IP as a default part of their superannuation.
How great would it be if insurance were valued and understood by more Australians? Perhaps we could even make inroads to closing the underinsurance gap.
The Rice Warner Underinsurance in Australia 2017 report found that the median level of income protection cover was only 36 per cent of median household incomes. This highlights the scale of the problem – and the opportunity to make a difference.
Of course, being simple is an exceptionally complicated thing to do. There are many implications that must be considered. As American businessman Chris Sacca aptly put it in 2014: “Simplicity is hard to build, easy to use, and hard to charge for. Complexity is easy to build, hard to use, and easy to charge for”.
But the potential benefits make it worth striving for