“Simplicity” in insurance and financial services does not always mean shorter, faster, or with fewer features. RGA research shows it is about creating order from the complex.
Average airline passengers who peer into the cockpit as they board a flight see a complex array of gauges, buttons, and switches that make little sense. But to an experienced pilot, each of those controls is easily understood and necessary to the safe operation of the plane.
This example provides a behavioral science lesson on simplicity that can be applied to the insurance industry and retirement products such as annuities.
Simplicity is an ongoing challenge in insurance products, processes, and customer communication. Failure to properly simplify can carry significant consequences – frustrating customer experiences, regulatory risks, and lower sales. The simplicity challenge has grown alongside the rise of direct-to-consumer (D2C) digital distribution models. These models offer clear advantages, such as cost efficiency, data ownership, brand control, and faster time-to-market.
But they also shift the decision-making burden to customers, who must navigate without guidance through a maze of jargon, trade-offs, and complex choices. This is much like putting an airline passenger in the pilot’s seat of a passenger plane. What is simple for the insurance agent or the financial advisor can be overwhelmingly complex for the customer.
The challenge starts at a much more foundational level: Simplicity is often misunderstood. This article examines what simplicity is – and isn’t. It argues that “simplicity” doesn’t necessarily mean “shorter” and offers recommendations on how insurers and financial advisors can fly through the veil of complexity to adapt their products, processes, and communication to a new age.
Many insurance and retirement products are inherently complex — not necessarily because of poor design, but because that complexity is essential. Just as an airplane cockpit is filled with controls to keep the plane safely in the air, these products contain technical features that make them functional and economically viable. These features are the controls that make the products work and suit different customers’ needs.
But they can also be overwhelming and opaque.
Insurance and retirement products have traditionally been sold through agents and advisors — trained professionals who understand the nuances. The problem arises when the same products, concepts, and decisions are presented to consumers without appropriate adjustments.
Evidence shows potential customers do not understand much of the information they are presented, creating a barrier to purchase.1 Most potential customers lack the experience to confidently make the long-term, uncertain trade-offs required in insurance and retirement-product purchases. Yet too often, “simpler” is linked with shorter, faster, and fewer features. This misses the point.
As Apple’s former design chief Jony Ive put it, “True simplicity is derived from so much more than just the absence of clutter and ornamentation. It's about bringing order to complexity.”
Simplicity makes things intuitive and less stressful. For insurance and retirement products, this means making trade-offs easier to grasp and helping customers reach decisions confidently, accurately in line with their goals, and with less frustration.
A common go-to solution is to reduce the structural complexity of the products themselves. This is not inherently a bad aim. In fact, it can be quite good. But it is not always the answer. This route can be time-consuming, expensive, and often not possible, as complex mechanics often make the product economically viable. Reducing complexity also reduces consumer choice, which is not necessarily what the customer wants.
Simplicity is about more than just how something is built; it is about how people perceive a product. That perception is based on the user’s experiences and mental models.
RGA’s Behavioral Science team has run experiments to test different strategies for simplifying life insurance journeys.2 Below are 10 that have proven effective – and that apply to retirement products, too.
The benefits of true simplification are significant. RGA research shows how customer comprehension and conversion rates improve by using easily implementable behavioral science techniques. These techniques are not necessarily about changing the product structure itself; rather, they are about ensuring it is presented intuitively.
One interesting finding from RGA’s research was that simplifying a key insurance process — completing a form to submit a claim — by breaking the questions into small, specific parts made the process longer; however, it was so much easier for people to think through that they believed it was quicker.3
This highlights a key question: Does perceived time matter more than actual time for customer experience? Ultimately, simplicity is in the mind and can be managed using the techniques described here, while keeping products economically viable and preserving choices for customers.
By embracing this broader view of simplicity, insurers and financial services providers can improve outcomes and create customer journeys that are efficient and effective. Learn more today about how behavioral science can improve your business.
