Manulife tops in policy statements: DALBAR

Despite the complexity of the products it offers, the insurance industry is doing a commendable job in creating understandable policyholder statements for consumers, according to DALBAR, a recognized evaluator of communications in the financial services industry.

Manulife took the overall performance award as well as top honours for both universal life and segregated fund statements. Competing against nine other companies in the UL category, Manulife scored 83.79, impressive compared to the industry average of 70.4. With 12 companies in the seg fund categories, Manulife scored 74.79, just shy of 10 points above the industry average of 64.81.

Jody Bullen, director of public relations and business development, DALBAR, notes that in general most of the companies evaluated performed well, although she adds that because the study is voluntary not every firm participates. “Some companies do not make any changes to their statements, so obviously they don’t want to submit something that they know needs more work.” This makes it difficult to gauge the performance of the insurance industry as a whole.

“With each weightings structure, you have companies that really excel in one area, but in the overall category rankings, close behind Manulife was Standard Life and Canada Life,” she says.

Bullen also commended Industrial Alliance and Clarica as strong performers in the UL category, while Clarica, Sun Life and London Life were recognized as providing reader-friendly policy statements for seg funds.

DALBAR noted that in this particular study, the industry showed strength in creating policy statements that avoided confusing or ambiguous language. For example, the segregated funds participants were diligent in showing the value and percentage of the fund’s investment in each asset class.

There are areas for improvement, though. “The study would like to see companies provide other sources for up-to-date account information that compares account growth or decline to industry benchmarks,” Bullen says.

She adds that more companies should include personalized account information that is specific to the client’s product performance.

Every two years, DALBAR provides the results of its policyholder statement evaluations for both universal life plans and segregated funds. The study is voluntary and those companies that submit their literature to DALBAR have it evaluated by a 10-person team who has expertise in determining how the statement will be interpreted by a consumer.

Bullen says the features that are evaluated are those that strongly impact policyholders’ ability to understand important account information. The evaluators will check to ensure that much of the language is in layman’s terms and that the statements avoid using complicated disclosure language where possible.

Filed by Mark Noble, Advisor.ca, mark.noble@advisor.rogers.com

(03/21/07)