Why insurance transparency matters and 3 tips to improve it

Insurance customers value clarity and transparency, but many struggle to understand their options when selecting the right policy for their needs. When these essential elements of a good insurance customer experience are not in place, customers may become confused and frustrated, potentially abandoning their search for coverage or discontinuing the policy they already have. Here’s why insurance transparency matters and how to provide it.

Customers expect clarity and transparency in insurance

When customers request a quote for an insurance policy, they expect to receive clear and comprehensive guidance on what it covers, including any applicable fees. This way, they can make an informed decision on whether the policy is worth their investment. However, the challenges in transparency can prevent them from confidently reaching a conclusion.

According to an IDC infographic sponsored by Samsung, Shaping the Future of the Insurance Agent: From Order Taker to Caregiver,¹ 53% of U.S. consumers express confusion when comparing quotes and coverage options. This is especially true for marginalized groups, such as the less affluent or unemployed, who are sensitive to price fluctuations.

Fifty-one percent of customers report frustration due to the lack of clear information, particularly when it comes to understanding the terms and conditions and fine print covering the implications of various scenarios. This dissatisfaction is especially pronounced among Gen Zers, who expect the same transparency that tech giants and e-commerce platforms provide.

Unclear policies make it hard to earn and keep customers

When customers are unable to understand the value of their insurance policy, they may not move forward with a purchase. Even customers who have already taken out a policy may decide it’s not worth it in the end if they aren’t sure how it benefits them. In a challenging economy, customers may be especially incentivized to trim what they see as an unnecessary expense from their budget.

According to research from McKinsey, 40% of insurance customers who considered canceling their policy were doing so because they believed the policy wasn’t necessary or because they thought that it didn’t provide sufficient value. When this happens, insurers may lose out on valuable opportunities not just to earn new customers but also to keep the ones they’ve already won.

Tips for improving insurance transparency

Companies should shift more of their focus on improving the customer experience by overcoming these common barriers to attract and retain customers.

1. Keep customers’ goals in mind

They should begin by embracing their customers’ goal: to gain a clear and concise understanding of all product information. This way, the customers can understand the corresponding coverage, compare it to what is available in other products and decide how to proceed without wasting time trying to figure out what each policy includes.

2. Use clear and effective messaging

Insurance companies should also clearly communicate how their products align with the communities they serve. A great place to start is by creating clear and accessible messaging that effectively demonstrates how their policies meet their customers’ needs. This messaging could be tailored to specific demographics — for example, highlighting pricing transparency for Gen Z customers or accentuating the unique insurance requirements that members of the Silent Generation (aged 75 and older) have compared to their younger counterparts, as noted by the IDC infographic.

3. Offer personalized insights

When a customer reaches out to inquire about coverage options, insurers should provide them with the personalized insights they need to make an informed decision. Smart analytics can accelerate this process, providing the clarity and transparency needed for the customer to feel comfortable deciding. For example, technology solutions can help insurance agents pinpoint specific aspects of coverage that an individual customer needs, so they can quickly ascertain whether a particular product is right for them.

Build lasting customer relationships with transparency

Transparency in insurance isn’t optional anymore — not to today’s customers, especially those hailing from younger generations such as Gen Z. Transparency inspires trust and empowers customers to make informed decisions. Insurers can enable this essential transparency by creating clear messaging about how their products meet their customers’ needs and using smart technology to help agents quickly provide personalized service. By putting customers’ priorities at the center of the experience they provide, insurers can build lasting relationships that create value for everyone involved.

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¹IDC Infographic, sponsored by Samsung, Shaping the Future of the Insurance Agent: From Order Taker to Caregiver, #US51998324, April 2024.