Why the insurance jargon bust is a must
Clients may be feeling unsure and confused as the current business landscape rapidly evolves in the wake of COVID-19. It is widely recognised that language around insurance concepts can be quite technical, so now more than ever, it’s important to help clients effectively understand what their coverage means both now and into the future.
The relationship and engagement between a broker and client must be at a level where the client fully understands the information supplied to them. Particularly in this current climate when trust is at a premium, clarity of language can be the basis for building a positive partnership.
Indeed, there are legal ramifications to ensuring a client feels well informed. There is an obligation in the Corporations Act for disclosure documents to be clear, concise and effective.
According to Dallas Booth, CEO of the National Insurance Brokers Association (NIBA), good communication still goes beyond what the legislation covers. There are issues with what is considered to be ‘clear and concise’.
“The problem is that a PDS (product disclosure statement) became accepted as meeting those requirements, which in hindsight was a mistake, as we do have a problem with disclosure of information, and we know that consumers tend not to read those PDS documents. Insurers, and brokers especially, need to make sure that communications are readily and easily understood by their customers.”
Handle with care
Care is also vitally important in this process of jargon ‘translation’. The same information must be communicated to all customers, with none of the meaning of the original communication altered in the process.
“Brokers need to convey to their clients what sort of risks they might be carrying, whether they are discussing insurance options for their home, their life, their health, their car, or their business,” says Booth.
People are generally unaware of the full extent of risks they face, so the broker needs to fill in that knowledge gap then secure the best insurance with the appropriate terms and conditions for the best price. Indeed, this act of translation and explanation is where a broker can prove their value, especially in uncertain times such as this.
“When it comes to reviewing the policies that are available in the marketplace, particularly when it comes to the more complex area of commercial insurance, expertise is required to navigate those, and that is where a broker provides value.”
If you need legal advice, you’d consult a lawyer, and if you need medical advice, you’d speak to your doctor. So it goes then, that for insurance advice, Booth says, it’s best to consult an insurance broker.
“While it’s possible for a client to understand their risks and what’s available in the marketplace independently, it’s a far more cost-effective exercise to use a broker who has expertise in those areas and has the requisite training and experience to assess the client’s situation and give them the advice they need,” says Booth.
The broker’s job is to take the information presented to them by insurers and translate that into simple and easy to understand language for their clients.
“Your language should always be relevant and appropriate for your audience. When your audience is a technical one, you can use jargon, but when they are not, you must communicate in a way which is still effective but also enables people to understand and make informed decisions based on that communication,” says Booth.
The information is intended to be of a general nature only. We do not accept any legal responsibility for any loss incurred as a result of reliance upon it – please make your own enquiries.