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January 5, 2012

My New Year’s Wish: Customer-Friendly Insurance Billing

by Max Dietshe
Senior Strategist

When my dad’s health declined late last year, I took over his financial and medical affairs. Since I analyze incomprehensible financial and medical communications for a living, I suppose I shouldn’t have been surprised to find myself on the receiving end of a blizzard of complex financial, legal and medical paperwork.

Since my dad had been having trouble remembering to pay his bills, he fell behind on some insurance premiums. After pulling his finances out of their tailspin and bringing his premium payments up to date, I received this stellar example of obfuscation from a life insurance provider (the company name has been redacted).

When reviewing this bill (if that’s what it was), a couple of things came to mind:

It looks like this policy has lapsed, and certain critical dates are referenced including the “lapse date” of 01/07/12. But how do we know when the notice was sent? Would it be that hard to date the communication?

Try as I might, I can’t seem to make the math add up. Granted, I was a language major, but I get the following:

The “current billed premium amount” is $300, billed “semi-annually.” Which seems to mean the total annual premium is $600, billed in two installments of $300 – or does it mean the total annual premium is $300, billed in two installments of $150?

The notice states that the monthly premium (switching time frames here) as of the next policy anniversary date (whenever that might be—and would it be that hard to state the policy anniversary date?) will be “approximately” $211.66. So this makes me wonder…is the annual premium really increasing more than fourfold, from $600 to $2,540 (i.e., 12 monthly payments of $211.66)? That would be a lot to pay for this $10,000 life policy…and if it’s the case, shouldn’t the notice be labeled “Notice of Premium Increase?”

Another puzzle—the amount due, $468.08, includes “future charges to ensure your continued coverage” through 02/07/12. So $468.08 – $300 = $168.08…which equates to what? How many months at what rate?

The back of the form contains an “Increase Premium Authorization,” whereby the recipient is invited to increase the premium? Huh? I thought it was already being increased! And what am I to make of the free-form field where I am to fill in the amount?

I’m sure this notice and much of its content is “required.” But this kind of communication is inherently bad—generated by a machine, for a machine.

It’s not only bad from the customer-experience point of view: I have to assume that any compos mentis recipient would immediately call the provider for an explanation. Multiply the number of notices by the number of calls at (say) $32 a call, and soon you’re talking about a serious negative impact on the bottom line.

There is a better way: apply the PLAID (Plain Language and Information Design) methodology to clarify messaging, present numbers in a way that adds up, and drive the desired action while enhancing the customer experience—freeing the service center to have the kind of conversation the provider would like it to have. It’s just as easy to do it right—easier, even!

All of us at Addison wish you a healthy and happy 2012. Now, if you’ll excuse me, I have to go cancel a life insurance policy.