Communicating Complexity

by: Financial Services Commission of Ontario (FSCO)
www.fsco.gov.on.ca

How FSCO used behavioural science to grab drivers’ attention

When it comes to financial literacy, most of us think about helping people understand how to budget, how to save for big ticket items like a house, or perhaps how to plan for retirement. Less common, but just as important, is the need to help people understand and make informed decisions about their insurance policy.

Insurance is a key component of your financial security. Yet it is often ignored or overlooked, because it requires us to think about the unfortunate situations that would lead us to need the coverage. No one wants to believe they will ever be in a serious car accident, and yet, it is imperative we understand what we get (and what we don't) from our auto insurance policy in the event one happens.

The challenge: communicating auto insurance reforms

Auto insurance is mandatory for Ontario's almost 10 million drivers. It is also complex – with difficult-to-understand rules and terminology. And while the many options give drivers choice to find a policy that suits their needs, most people simply don't pay much attention to the details - choosing to focus primarily on the cost.

Research commissioned by the Financial Services Commission of Ontario (FSCO) in Spring 2016 confirmed auto insurance is not something we regularly put much time or thought into – 52 per cent of drivers simply "auto renew" their insurance every year and only 10 per cent actually know the details of their policy.

So when the government introduced significant changes to the auto insurance system requiring drivers to make important decisions about their coverage at renewal time, FSCO recognized the challenge it would be to get drivers to recognize the impact of the reforms and be prepared to make informed decisions.

The approach: behavioural insights

In addition to using digital, social and traditional media to raise awareness, FSCO used behavioural insights research to maximize the impact of the information being provided to consumers, in order to increase their awareness and understanding of the changes.

Step 1: Prime the audience

Insurance companies were instructed to send out a simple, one-page document to all drivers alerting them that changes were coming and to watch for more information.

Step 2: Simplify the details

Using clear writing principles, writers worked to develop two options for another document that would be mailed to all drivers with their renewal package. This document needed to explain the extent and complexity of the changes as succinctly as possible in a way that was easily understood by readers. One option provided more in-depth descriptions. The second option provided higher level information and drove people to the website for more details. Both were also sent to an industry working group for comment and input.

Step 3: Recognize human nature

People are generally more motivated by the potential loss of something than by a potential gain. Research studies across policy domains ranging from organ donation to pension plan enrollment have found that people are likely to stick with a default option because, unless they are strongly motivated to act, people tend to avoid making decisions and simply take the path of least resistance.

Recognizing this, the document needed to emphasize that readers must act quickly or else their benefits would be automatically lowered. A clear, bold call to action was also added instructing the reader to contact their insurance representative.

Step 4: Get their attention

These days, we are exposed to a constant stream of information from multiple sources vying for our attention. As a result, we are more likely than ever to overlook even important information. In addition, the renewal packages themselves contain a substantial amount of information and paperwork, so this document needed to stand out. Adding colour, along with a simple, large, direct title ("Important Changes to your Policy!") to the top of the document helped draw readers’ attention and communicate the urgency and importance of reviewing the information. Other treatments such as bolding, use of larger text and underlining were strategically applied to text to draw attention to key points, even if readers simply scanned the document.

Step 5: Test

The two versions were put in front of consumer focus groups to observe how they responded. The formal research was designed to get input from actual Ontario drivers on the likelihood of them reading the document and taking action, the adequacy of the information provided, and the ease of understanding the content.

While there was a clear divide between participants in terms of the level of detail they would like to receive in the document in order to feel they understood all the changes, there was agreement from the majority of participants that the brief version would be more likely to be read. The research also showed that the visual impact of the textual design elements, as well as the use of colour for emphasis, made it easier for readers to quickly understand the key points and the importance of learning more about the changes.

Step 6: Execute

FSCO took the well-received elements of each document and combined them into one, hybrid version for distribution. The consumer insights allowed FSCO to define what information the audience needed to have a clear understanding of the content, while still drawing their attention to get them to read it in the first place.

Financial literacy: an ongoing effort

The reforms continue to roll out until May 2017, as drivers renew their auto insurance. As a result, no metrics are yet available to evaluate the success of this initiative. But FSCO expects to see a positive shift in the percentage of drivers who read their renewal documents, and made the effort to contact their insurance representative to learn more so they could make a responsible decision about their coverage. In the meantime, FSCO continues to explore new ways to help improve auto insurance literacy so drivers can be empowered to make smart financial choices that protect themselves and their families.