Insurance Literacy

The Importance of Insurance Knowledge

Insurance knowledge is the ability to understand and make informed decisions about insurance coverage. This helps individuals and businesses protect their financial futures against unexpected events.

Insurance helps people protect their lives and assets against unforeseen events like natural disasters, car accidents or home repairs. But low insurance literacy levels can prevent consumers from making smart choices about their coverage.

Understanding the Sector

The insurance sector is incredibly diverse. Life insurers focus on legacy planning and replacing human capital value; health insurance companies cover medical costs; property, casualty, or accident coverage helps replace the value of a person’s assets. Regardless of their niche, all of them are in the business of protecting individuals’ financial assets and covering life’s unexpected events.

Updating existing products and maintaining existing systems has consumed the lion’s share of many life insurers’ capacity and resources, but new opportunities exist for those who can prioritize innovation initiatives with clearly defined KPIs, well-aligned priorities, and fully tapped resources. Setting up an accelerator with a dedicated team and focused innovation operating model can rapidly open up robust opportunities to innovate beyond core offerings.

This can include alternative data sources to speed up application underwriting and processing, seamless cross-selling and customer personalization, and accelerating product launches.

Understanding Insurance Terminology

There is a lot of specialized terminology used when talking about insurance. If you don’t understand it, you could be left at a disadvantage when applying for a policy.

Insurable interest – A person must have an insurable interest in something before they can be insured against its loss. This can be a person, animal or property.

Term Sheet – A document that shows the basic details of an insurance policy. It typically includes the insured’s name, policy numbers and coverages.

Capital and surplus – a company’s assets minus its liabilities as reported on a statutory accounting basis. It is a requirement of many states for insurance companies to have this amount of money in reserve to cover claims and misjudgments. This is also known as a solvency cushion.

Understanding Insurance Regulations

Insurance regulation is a vital component of ensuring consumer safety and financial stability in the sector. This includes the establishment of guaranty funds that can be used to cover policyholders’ losses when an insurer fails.

In addition, most states regulate insurance policy forms, requiring that they be readily comprehensible and comparable with other policies. This helps ensure that consumers don’t get ripped off by insurers who leave out important provisions or overcharge them on premiums.

Finally, regulation establishes minimum capital requirements based on an insurer’s riskiness. This is an important safeguard, as insurance companies must invest their premiums to generate income. Fluctuations in interest rates or poor investment performance can threaten an insurer’s solvency, causing it to raise or lower its prices. Consequently, a high level of insurance knowledge empowers customers to make informed decisions about the coverage they need and how much they pay.

Building Rapport

Building rapport is the ability to establish a connection with clients that fosters trust and encourages two-way communication. This is especially important when dealing with customers over the phone, where agents must remain attentive and provide thorough support to keep them satisfied.

Rapport is often based on shared experiences and views, including a sense of humor. Those who can build rapport with their customers can lay the foundation for a professional and profitable relationship that lasts years to come.

Asking the right questions is an essential part of creating a rapport with your customers. Generic questions like “How is your day?” may prompt a short back-and-forth, but asking specific and personalized questions shows that you care about getting to know your customer. Rapport is also bolstered by your willingness to adapt and meet your clients’ needs.

Product Knowledge

Product knowledge enables employees to answer questions and concerns about insurance products. It also helps them explain features, benefits and policy details to customers. This helps in building confidence for the customer and increases customer retention.

Customers expect a quick and easy experience when it comes to resolving issues, changing policies or filing claims. Product knowledge provides a foundation for self-service features that make it easier for customers to access and manage their information. This can decrease your cost-to-serve while freeing up your agents’ time for other tasks.

Build your team’s insurance product knowledge with IRMI’s EXCEED training series. These short episodes cover critical property and casualty concepts in a way that is simple, effective, and engaging.

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