The insurance industry must do a better job of engaging clients by communicating with them in an authentic way, according to Luisa Uriarte, executive vice president and partner with Elmhurst, IL.-based consulting firm Maddock Douglas, Inc.

Speaking at the LIMRA and LOMA Canada Annual Conference in Toronto on Tuesday, Uriarte presented the results of in-depth research study conducted by Maddock Douglas, which reveals a disconnect in the communication between the insurance industry and the public.

“[There’s] this tension between the insurance industry’s intent, and a consumer’s perception of what that intent is,” said Uriarte. “The industry means well. Your intentions are noble, and the product is fundamentally about protecting your loved ones…but what consumers are actually feeling are things like distrust, intimidation, negativity, confusion.”

This disconnect is having a negative impact on sales, according to Uriarte. The research by Maddock Douglas shows that even among individuals who have actively researched insurance with the intension of purchasing a policy in the past year or two, a high proportion did not ultimately make that purchase.

A key reason is that consumers feel confused by the information they’re getting from the industry, Uriarte said. The research shows that 84% of consumers do their own research when shopping for insurance, and 45% compare this task to trying to navigate a maze. Many of the individuals surveyed said they find insurance brochures and marketing materials unnecessarily complex and convoluted.

Furthermore, 72% of consumers said they believe life insurance products don’t have to sound so complicated.

“We’re not making it easy,” Uriarte said, noting that most consumers don’t understand common industry terms such as underwriting, living benefits and riders.

By communicating in a clearer and more authentic way, she said advisors and insurance companies could potentially drive more sales.

“I think there’s a huge opportunity to innovate in and around language, and the words that we use, and how we communicate to consumers,” Uriarte said. “The more we’re able to move these perceptions, the more we’re able to engage a consumer, the more likely we will be to trigger a purchase interest.”

Uriarte defines authentic communication as having the following characteristics:

  • easy to understand;
  • down to earth;
  • memorable;
  • positive;
  • credible; and
  • relevant.

Relevancy is likely the most important element of authentic communication, Uriarte said.

“Consumers are really expecting you to know them, as individuals,” she said. “This is all about feeling like a company understands or knows them.”

The industry has considerable room for improvement in this area, as Maddock Douglas’s research shows that few consumers find the insurance industry’s advertising and communication relevant to them. Nearly half of the members of generation Y surveyed said they believe the industry is targeting someone much older, whereas nearly half of the baby boomers surveyed said they feel as though the industry is targeting someone much younger.

“There is a total disconnect,” Uriarte said. She urges the industry to communicate with clients in a way that demonstrates a thorough understanding of their individual needs.