September 26, 2013
Consumers Confused, Overwhelmed by their Insurance Policies, According to Survey
Columbus, Ohio - Most insurance policyholders would prefer to have a simple explanation of their insurance policy in terms they can understand and have policy details explained in a brief, one-page summary, according to survey results released by Nationwide Insurance today. When asked to describe their insurance policy, consumers said their policy was too long (53 percent), complicated (43 percent), overwhelming (31 percent) and confusing (29 percent).
Nationwide Insurance commissioned the survey, which was conducted by Harris Interactive, who polled nearly 1,600 people who own property and casualty insurance.
More than half (57 percent) of consumers who responded to the survey feel they know more about their favorite prime-time television shows than they do about their insurance policies.
“Over time, insurance policies have become legal documents written to reflect state laws and to outline coverages in detail so consumers know what they are buying,” said Mark Pizzi, president and COO of Nationwide Insurance. “Nationwide understands the importance of helping our members understand their policy. Encouraging consumers to have a conversation with their agent is one of the best ways to educate them about what they are buying.”
Other results from the survey showed that:
- Less than half of those polled (40 percent) have read their current insurance policy in its entirety (in the past 12 months)
- Only one in five consumers believe they completely understand the details in the insurance policy they purchased
- Half of all consumers say they don’t understand how to file a claim with their insurance company after an incident
Nationwide Insurance believes that making changes to insurance laws would make it easier for insurance companies to deliver their policies in a manner that would be simpler for consumers to read and understand. Those changes include:
- Supporting the creation of an optional, easy-to-read summary of coverage on top of the insurance contract. This will help consumers develop a better understanding of what they purchase.
- Allowing insurers to use simpler language when communicating with customers in the insurance contract and other legal documents. This would create a more informed and educated consumer.
- Approving legislation and regulations that would allow use of electronic notifications and signatures on insurance documents to make it easier for consumers to do business with insurance companies.
Nationwide Insurance has already begun to make changes to its products and services to simplify the insurance experience for its members, including:
- Making members’ insurance information available to download on their smartphones through the Nationwide mobile app.
- Leveraging its exclusive insurance agents to have conversations with members and prospective members about their policy details so they have a better understanding of Nationwide's insurance products, services and coverages. Nationwide also encourages its exclusive insurance agents to conduct On Your Side Reviews with members so they can choose the coverage that meets their needs.
- Providing members with customer worksheets when they are working with their agents to determine what type of insurance coverage they want to buy. These customer worksheets explain what each term in their insurance policy means in language that is easy to understand.
“Are we shocked at the results of our research? No. But it highlights the need for Nationwide to continue to work with our regulatory partners to make it easier for our members to understand the insurance protection they are purchasing,” said Pizzi. “Being in a situation where you need to use your insurance is difficult enough. Understanding the key elements of your policy should be easy.”
The Simplification Study was conducted between February 22 and March 5, 2013. The respondents were comprised of 1,594 adults ages 18+ who currently own property and casualty insurance. Results are weighted as needed for age, sex, race/ethnicity, education, region and household income. Propensity score weighting was also used to adjust for respondents’ propensity to be online. Individuals for this research were selected from among those who have agreed to participate in Harris Interactive surveys. Because the sample is based on those who were invited to participate in the Harris Interactive online research panel, no estimates of theoretical sampling error can be calculated.
Nationwide Mutual Insurance Company, based in Columbus, Ohio, is one of the largest and strongest diversified insurance and financial services organizations in the U.S. and is rated A+ by both A.M. Best and Standard & Poor’s. The company provides customers a full range of insurance and financial services, including auto insurance, motorcycle, boat, homeowners, pet, life insurance, farm, commercial insurance, annuities, mortgages, mutual funds, pensions, long-term savings plans and specialty health services. For more information, visit www.nationwide.com.