When it comes to training and education, the insurance industry needs to not only address the information needs of its own people, but of the general public as well; and to be most effective, it pays to start early–in high school.

The industry already provides a front-line information resource: the Insurance Information Institute. Through its Web site and its media relations efforts, the public has access to current, pragmatic counsel on insurance coverages and issues.

The industry has also responded to the public's need for information following recent hurricanes with the Hurricane Insurance Information Center, as well as individual insurance company outreach initiatives through various media outlets and customer communications.

What complicates the problem is the fact that most of the people hearing the message have already developed their perception of the industry and are listening with biased minds. Many assume the industry is trying to paint a picture that is self-serving and creating an argument for denial of their claims.

A few years ago, several leading insurance companies and agents formed a task force to address the public's lack of understanding of insurance and how the risk transfer process works.

The task force concluded that if the public better understood how insurance risk is evaluated and priced, they would begin to realize that premiums must be sufficient to accommodate the degree of risk.

For example, do they understand that the greater the risk (e.g., building on the Florida or Mississippi coast), the higher the premium should be? Or that being forced to compensate for coverage (flood) that was not incorporated into the underwriting and pricing process creates inequities and market voids?

The task force's recommended solution was to form the Insurance Education Foundation (now known as the Insurance Education Institute) to improve the understanding of insurance and risk management, as well as their role in society.

The IEI focuses on the emerging insurance consumer: high school students. At the age of 16, young people are first introduced to the insurance underwriting process and usually experience a negative, knee-jerk reaction to the cost of their new-found freedom: driving an automobile.

The typical response from teenage drivers (and parents) is, “This isn't fair!”

Teenagers believe they are the safest drivers on the road; they are blessed with excellent reflexes and superior judgment compared to those old folks creating traffic hazards by impeding their swift arrival at the beach on a warm summer day.

We can and are changing that mindset as the IEI provides risk management education to high school students.

We have found that once a young person understands the factors that influence risk–driving recklessly, drinking and driving, being responsible by getting good grades and practicing sound financial management–they begin to evaluate and perceive risk differently.

When a teenager recognizes that cheating on a claim or falsely responding to an underwriting question is no different than stealing a pair of jeans from Old Navy, their perception of how insurance works changes dramatically.

The IEI reaches the students through their high school teachers. The Institute provides educational programs to high school teachers through a variety of programs.

Two-week summer institutes provide teachers with in-depth education on all lines of insurance, with a touch of how insurance companies operate and are regulated.

The teachers graduate from the institutes (with three credits towards an advanced degree) armed with new knowledge and teaching materials ready for classroom presentation.

The IEI Web site, in partnership with many insurance companies and associations, provides teachers and students with quality information and resources for improving their understanding of insurance.

Over 3,000 high school teachers have graduated from the IEI institutes. It is projected that each teacher will reach an average of 75 students each academic year.

Thus, the 204 graduates of the 2006 institutes have the potential to educate over 15,000 high school students about insurance during the next academic year and every year they remain in the teaching profession.

We must also never forget that teachers are very influential in young people's lives–many times more so than parents.

Teachers incorporate their own biases and perceptions into classroom instruction. If we can provide teachers with sound and high-quality knowledge about managing risk, they will convey that understanding to their students.

An impact study conducted for IEI by James Barrese, Lisa Gardner and Ellen Thrower reported that after receiving information about how the industry works, student attitudes about insurance improved from 4.25 to 4.70 on a Likert scale (1-7). Equally significant was the students' response to the statement: “I think insurance companies are fair to consumers,” with the change being from 3.55 to 4.13.

The report concludes, “As attitudes change, so do perceptions about understanding and vice versa.”

The study also found that the students' perception of career opportunities in the insurance business changed significantly as well. To the topic, “Many good job opportunities exist in the insurance industry,” the student's opinion improved from 4.17 to 4.83.

In response to this finding, a key part of the IEI curriculum and materials focuses on ways young people can find exciting opportunities and rewarding careers in the insurance business.

IEI supporters and board members–over 180 insurance companies, agents, reinsurance companies and brokers–also recognize that during the insurance education process, a perfect opportunity arises to inform, educate and recruit young people into the industry.

The IEI is expanding its program, in collaboration with companies and organizations such as the Independent Insurance Agents and Brokers of America, to reach young people, guidance counselors and parents and to educate them about opportunities through university risk management programs, community college insurance courses and online courses.

In addition, the IEI can assist young people in charting their course into the insurance business at the agent, company or risk management level.

Perception is indeed reality. Through pre-consumer education, we can change tomorrow's insurance consumer's perception and understanding of insurance.

Special Reports /

Teaching Insurance To Teenagers Can Boost Industry's Image Down The Road

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