Mark Pizzi commentary: Insurance shouldn't be so complicated

Let’s play a little trivia.

• Name two items for which inland marine insurance coverage provides protection.

• Name two judges on America’s Got Talent.

If you answered the second question correctly, but not the first … you’re not alone.

According to a recent survey released by Nationwide Insurance, 57 percent of consumers said they know more about their favorite prime-time TV shows than they do their insurance policies.

The simple truth is that the judging process on shows such as America’s Got Talent is easier for average Americans to understand than their insurance policies, even though insurance could have far greater impact on their lives.

Why does the typical American want an insurance policy that is easier to understand? First, it takes the guesswork out of knowing which items you own are covered and which aren’t. Second, it gives you the peace of mind of knowing what coverage you have, so you can determine if you need more or maybe less. Finally, it gives you the confidence of knowing what you are protected for and what to do to get your valuable possessions replaced if they are stolen, damaged or destroyed.

How can insurance policies be made simpler?

Let’s take the example of inland marine coverage, which, to answer our question above, provides protection for high-value personal property, such as jewelry and art.

Marine insurance dates back to 17th century Europe, when most items were transported by boat across oceans or lakes. As you can imagine, a lot of things can go wrong with a ship when it is traveling through rough waters, so insurance protection was needed to recoup losses. Thus, marine insurance was born.

However, insurance coverage did not exist to cover storing these items once they made it across the ocean or when they were transported through channels or rivers, or by methods other than boat. Inland marine insurance was created to provide such financial protection. Today, inland marine coverage is still used in the same way, but it has been expanded to provide individuals coverage for their valuables.

The term inland marine coverage made sense when it was created in the days of Sir Isaac Newton. However, for the 21st century consumer, it is outdated and confusing.

Getting rid of confusing policy language is just one example of how the insurance experience can be made easier for consumers. Another example lies in the way we use modern technology.

Ohio law requires consumers to carry a paper auto-insurance identification card while driving. This card serves as proof of insurance in the unfortunate event of an accident. Current regulations do not allow consumers to use a mobile device such as a smartphone to show a copy of their ID card to law enforcement officials as valid proof of insurance.

When the regulation was written and passed, it made sense. Mobile devices hadn’t even been thought of yet. But times have changed. Today, smartphones are a part of our everyday lives, and more people are taking steps to go paperless. Ohio insurance consumers should have the option of taking advantage of the conveniences that modern technology provides.

Legislators, insurance regulators and the insurance industry need to work together to make insurance easier to understand and use. At the legislative and regulatory level, state legislators and regulators could:

• Support the creation of an optional, easy-to-read summary of coverage on top of the insurance contract. This would give consumers a better understanding of what they purchase.

• Allow insurers to use simpler language when communicating with customers in the insurance contract and other insurance documents. This would create a more informed and educated consumer.

• Approve legislation and regulations that would allow use of electronic notifications and signatures on insurance documents, to make it easier for consumers to do business with insurance companies.

The good news is that the insurance industry and the Ohio Department of Insurance already are working to enact some of these changes.

Nationwide is reviewing its products and services to see what can be done to simplify the insurance experience, and we encourage other companies to do the same. It will take the industry, regulators and legislators working together to make the insurance experience easier for consumers.

Being in a situation in which you need to use your insurance is hard enough. Understanding your insurance should be simple.

Mark Pizzi is president and chief operating officer of Nationwide Insurance.