Insurance terminology and language discourage uptake of cover

Insurance terminology and language discourage uptake of cover

- in News
Zelina Francis Business Development Director

Insurance companies have been cutting themselves out of the majority of the population because they have products that require talking to an advisor or agent first before purchase.

Till today the terminology of insurance, conditions, the terms, legal jargon and even the language of policies continue to be barriers to the uptake of insurance products in Zimbabwe.

Speaking to Journalists at a training workshop the co-founder of a leading financial services aggregator, Zelina Francis said that the phrasing and names of insurance products continued to be impediments in the uptake of insurance cover in the country.

The insurance penetration rate in Zimbabwe has plummeted from a high of 5% in 2004 to a low of 1.5% in 2017. Zimbabwe’s insurance penetration rate has deteriorated from being one of the highest in Africa to one of the lowest.

In 1990, the insurance penetration rate was 2.63% for Kenya, 3.20% for Mauritius, 0.55% for Nigeria, 9.89% for South Africa, 1.41% for Tunisia, and 3.84% for Zimbabwe. By 2013, insurance penetration was 3.41% for Kenya, 5.84% for Mauritius, 0.36% for Nigeria, 15.4% for South Africa, 1.76% for Tunisia, and 1.5% for Zimbabwe.

The Business Development Director said that insurance products in the market had big names and were not simplified enough to be easily understood by members of the public, hence the low uptake.

“The average guy does not know what endowment is, they don’t know what annuity means. You know when you even say whole life insurance it sounds closer to reality. But what is the difference between that and the others so, I think it’s a challenge to you guys the product as they are not simplified enough. Why do you come up with all these complicated names that we don’t understand?” Zelina questioned.

Insurance products in the market are currently not easy to understand to the extent that one has to look for an advisor or agent to help buy the correct cover for their exposures.

While, companies like Old Mutual have started to interact with their clients and clarify their products in vernacular languages. A client still needs to visit their offices to get advice. Where a client would then have to explain the type of product they want and the insurer would help direct the client on the type of product they should purchase.

This process is however tiresome as it requires one to travel to the insurers offices to get the information.

“What you are saying there is that you are forcing people to come to Third Street or Julius Nyerere Way, to look for an advisor to talk to,” said Zelina.

Many customers are calling for simple innovative products that take less time and add less inconvenience to their already hectic lives.

The lack of simplified and easy to understand products in the market has resulted in insurance companies losing out on the Diaspora market, and consumers who like to buy their products online.

“But most importantly we are now in a digital world. You have got customers in the Diaspora they want to log online and they can’t get that interface with the advisors.

In countries like the United Kingdom 70% of insurance products are bought online. Closer to home a 2016 Accenture survey showed that because the short-term insurance sector in South Africa has been slow to go digital they are losing out on an estimated R115.2 billion in Gross Written Premiums (GWP) opportunity.

Apart from buying insurance online, McKinsey & Company, a global management consulting company that has done extensive research on online buying for the insurance industry sates that the percentage of consumers who do research online before purchase of insurance is in the neighbourhood of 80%. Making it more important than ever for insurance companies to have simplified products and policy documents, that potential clients can easily understand.

Zelina added that customers should be able to easily recognise coverages and options that are appropriate for the exposures they face without necessarily having to visit an advisor or agent.

“I want to be able to go online and see what your product is, be able to understand it and at least get to a point where I am ready to buy or at least talk to an advisor or maybe just go ahead and buy,” she said.

Zelina called upon insurance companies to simplify the names of insurance products and make it easy for consumers to understand and just buy cover.

Rueben Java, an executive with Old Mutual Life, and current chairman of Life Offices Association of Zimbabwe (LOA) said that insurance companies would take up the challenge and look for ways to simplify their product offerings.

“We will take it as a challenge to the industry to apply our minds to it because we must always be responsible for the customers,” Java said.

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