A word cloud of jargon/Courtesy of sister publication Ignites
A word cloud of jargon/Courtesy of sister publication Ignites

If you find yourself routinely using acronyms like AOP and BOP or other insurance industry jargon in your everyday work vernacular, you might want to reconsider.

Indeed, there are numerous frequently used terms within commercial insurance such as secondary perils, rate adequacy, convective storms and reserve strengthening that can be confusing to newbies and veterans alike, not to mention customers.

While insurance often calls for the use of precise terms for regulatory and other reasons, carriers and brokers need to be careful about how they communicate, especially if people around them aren't likely to understand what they are saying.

Not only can jargon and acronyms be confusing, they can also alienate people, causing them to tune out important messages you're trying to communicate, according to marketing professionals.

"It creates ambiguity and skirts around providing clear and concise information about a message or direction on what you are trying to achieve," said Angeli Gianchandani, a global brand strategist and practitioner-in-residence at the University of New Haven Pompea College of Business.

Be Careful About Disengaging New Hires

Higher-ups sometimes throw around industry terms that they assume others know well or are familiar with. But it's a bad assumption that everyone knows what you're talking about, said Ronni Burns, adjunct professor of management communications at the Leonard N. Stern School of Business at New York University.

Whether they're new staff members, employees from other departments, or others, if they don't understand, they'll often tune you out. "At the very least it distracts from what you're saying. They get stuck on a word and they stop listening to whatever else you are saying," Burns said.

Managers need to be especially sensitive to newer workers who may not be familiar with or understand what certain terms mean. "If you're trying to lead a team of young people who don't know these terms, it's much better from a leadership perspective to speak plainly," said Sarah Zimmerman, a business lecturer at University of Michigan's Stephen M. Ross School of Business. "When people are trying to speak with colloquialisms, jargon, or acronyms, it doesn't help us understand the message itself. It doesn't impress people if they don't understand you," Zimmerman added.

Don't Assume Customers Understand Industry Speak

"Without a doubt, brokers and [carrier] salespeople need to know the precise definitions of insurance terms. But they also need to be able to translate those and explain them in a way that customers who are unfamiliar understand," said Michel Leonard, chief economist and data scientist at Insurance Information Institute. "If someone selling it cannot explain it, they shouldn't be in that job."

One term that tends to be particularly confusing is "inland marine" insurance coverage for businesses, said Spencer M. Houldin, president of Ericson Insurance Advisors, an insurance brokerage that works with high-net-worth clients and businesses and is part of global insurance brokerage Arthur J. Gallagher & Co.

Despite the name, inland marine coverage does not specifically apply to products when transported over water. Rather, inland marine insurance mainly covers products, materials and equipment when transported over land such as by train or truck, or while temporarily warehoused by a third party, according to the Insurance Information Institute.

Even the term "umbrella policy" can be confusing to some customers. "We try to say excess liability so owners don't get confused," Houldin said.

Be Wary of Acronyms

Houldin also cautions industry professionals not to simply use acronyms without explanations. For example, he tries to use the term "Business Owner Policy" as opposed to the acronym BOP, which is unfamiliar to many business owners who are first researching the types of business insurance they may need.

Jay K. Williams, head of faculty and academic development at The National Alliance for Insurance Education & Research, has also heard insurance professionals use the acronym AOP, instead of saying "all other perils" in the context of deductibles, which he advises against.

Better, instead, to explain to customers what it means. People understand the idea of a wind deductible, he said. "But if you say AOP, we've got to make sure they understand what that means."

Acronyms can also be different from industry to industry, which makes them even more inappropriate, Gianchandani said. She offers the example of the acronym KDP.

In marketing, that can stand for Key Drive Period. In the medical world, that can stand for Kidney Disease Program. And in the insurance world it can stand for Key Decision Point, a process used by the Federal Emergency Management Agency for flood-risk analysis. "You don't want to assume people know the understanding," Gianchandani said.

Assuming that can be especially problematic given the findings of a recent survey by Adobe Acrobat found that more than 56% of Americans admit they only sometimes look up the meaning of unknown acronyms. This includes often-used terms like RTO (return to office) and KPI (key performance index). The whopping 1 in 4 employees had no idea what this latter acronym stood for, according to the survey.

When it comes to jargon and acronyms, Williams sums it up. "Speak plainly," he said, "so that people understand it. I think that's the biggest thing we can do to benefit newbies in the industry, businesses, and others."