| Market
Connection Recap: Consumer Disclosures
By
Chris W. Kite, MBA, Vice President-Strategic Relations, COSS
Last
month, I hosted consumer advocate and consumer information specialist
Dr. Brenda Cude on a Market Connection teleconference.
Dr. Cude is the professor of housing and consumer economics
at University of Georgia and a designated consumer representative
to the National Association of Insurance Commissioners (NAIC).
On
the Market Connection call, Dr. Cude:
 |
Re-capped
a recent NAIC
presentation on purposes of consumer disclosure |
|
Described
the characteristics of helpful disclosure statements, based
on a 2005 NAIC-sponsored consumer focus group |
|
Evaluated
the readability of a sample COSS life insurance illustration |
Recommendations
& Insights
Dr. Cude noted that the sample illustration has a reading level
of 12th grade. She recommends simplifying to an 8th grade level,
which can be a challenge given the topic and illustration rules.
Dr. Cude wondered what consumers think when they see the word
"illustration". Do they understand that it shows costs
and benefits?
To
melt the feeling of a snow job of jargon, Dr. Cude recommended
letting consumers know if a disclosure is required by law and
is not just the company's choosing. Also, provide a summary
and highlights of what is important. Use bullet points, white
space, fonts, and formatting for readability (click
here to request Dr. Cude's Market Connection PowerPoint
presentation). She also recommended letting consumers know why
a document is important and that they may want to file it for
future use.
A participant on the call noted how an agent helps to explain
a life insurance illustration. The agent should explain what
is and is not guaranteed. The agent fills in the gaps and makes
a connection to the consumer's needs.
A
glossary of terms can either be helpful or intimidating. Some
illustrations explain terms in the narrative without a glossary.
Simplifying the text is a challenge. The tendency is to add
more and to go to smaller fonts. Product trends are emphasizing
guarantees and low premiums. Quotes or simpler illustrations
may work better with these trends.
About
the Speaker
Dr. Brenda Cude has helped the NAIC improve the readability
of its Buyers Guides and recently addressed attendees at the
NAIC Summer Meeting. In Georgia, she also directs the Peer Financial
Counseling Program and Georgia Saves, educational programs that
raise consumer awareness about financial independence and responsibility.
Click here
for her biography and contact information.
To
discuss ideas for simplifying or improving illustrations, please
contact me at chrisk@cossdev.com.
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