And when it comes to insurance, what insureds perceive they are buying, agents perceive they sell, adjusters perceive they adjust, underwriters perceive they underwrite and carriers perceive they accomplish are often at direct odds. Result? Endless arguments in seminars, online forums, learned publications and—unfortunately—courtrooms over what was intended by a coverage form versus what the insured thought versus what actually transpired at the time of the claim. And if that all goes south, here comes the E&O.

Related: Read Amrhein's previous column "Think Like the Dickens."

May I be so bold as to suggest the only perception that really counts is that of the insured? The other views are clearly important, but it is the insured who pays the freight, files the claim, complains to the regulator, hires the attorney and ultimately badmouths our industry all over creation if our "reality" doesn’t match his"perception."

So in the great tradition of "dare to dream," here, as Ryan Seacrest might say, is your next American Insurance Resolution!

Barring insanity, make the insured’s perception our reality.

Given the vast palette of possible illustrations, time and space limitations permit me to offer just one example that pushes all the buttons: hurricanes.

Let’s briefly compare industry hurricane "reality" with that of the insured.

1. Insured perception: My property gets damaged by a hurricane, I’m covered.
2. Industry perception: Well, now, just hold on a minute.

Note that I could stop right here and the insured already fully understands, "Houston, we have a problem." They may already be cussing the industry out on Facebook, complaining to regulators or, worse yet, calling an attorney. What they are likely not going to do is sit quietly and calmly awaiting your no doubt highly reasonable and technically correct explanation of why this seemingly simple claim is actually a complex legal issue. As one of my clients phrased,"Why is it when you sell it to me it seems so simple, but when I actually need it, it’s so complicated?"

Related: Read another column by Chris Amrhein "Livin' Large."

And complicated our industry has made it. A brief summary of insurance "reality":

• There is no such thing in standard property forms as "hurricane" coverage. For reasons best left to history, the two key perils by which hurricanes cause massive damage—windstorm and flood—were long ago separated into two different coverage sources: windstorm from standard forms and flood from NFIP.
• The industry likes to say that as long as an insured properly purchases both coverages from respective sources, the jigsaw pieces fit perfectly and all is right with the world of claims.
• If true, this would be comforting to insureds who bought both policies (and the agents who sold them both) who return after the hurricane to find their property totally destroyed, with no doubt all the damage is from either windstorm or flooding.
• Like surgically separated Siamese twins, once divided, the two coverages have moved on and evolved in their own ways, creating potentially huge gaps in what is often considered seamless coverage.

For example, adjusters often disagree, typically arming themselves with highly detailed engineering studies, on just what caused the damage. Did the property get flattened by high winds, and then the flood waters just moved the debris around? Or did the property survive the winds, only to have waves and flooding hammer it into oblivion, whereupon the debris was then easily picked up and blown into the next county?

Once the adjusters disagree, the windstorm and flood providers each have a vested financial interest in the other provider being primarily or solely responsible for the loss.

Let the games begin.

Even if we assume a single adjuster, a "write-your-own" situation, or any other time it is agreed flood is at least the primary cause of loss, instead of having reached a higher ground the insured now often finds himself just deeper in the bog.

For example, here is the basic definition of "flood" from the FEMA dwelling form:

1. A general and temporary condition of partial or complete inundation of two or more acres of normally dry land area or of two or more properties (at least one of which is your property) from:

a. Overflow of inland or tidal waters

b. Unusual and rapid accumulation or runoff of surface waters from any source

c. Mudflow.

2. Collapse or subsidence of land along the shore of a lake or similar body of water as a result of erosion or undermining caused by waves or currents of water exceeding anticipated cyclical levels that result in a flood as defined in A.1.a. above.

Seems clear enough, although I doubt an insured with a basement or yard full of water following a storm would totally understand the "two or more acres" or "two or more properties" references. "After all, what do I care about the neighbors? I’m the one who just lost everything to all this water, and it sure wasn’t here before that hurricane hit."

Now look at the pertinent portions from the corresponding homeowner form standard exclusion wording which has the stated intention of eliminating the coverage available from NFIP:

a. Flood, surface water, waves, including tidal wave and tsunami, tides, tidal water, overflow of any body of water, or spray from any of these, all whether or not driven by wind, including storm surge

d. Waterborne material carried or otherwise moved by any of the water referred to in A.3.a. through A.3.c. of this exclusion.

This Exclusion A.3. applies to, but is not limited to, escape, overflow or discharge, for any reason, of water or waterborne material from a dam, levee, seawall or any other boundary or containment system.

The exclusion starts nice and clear with the word "flood," although by failing to define it in the policy, the insured is left to hope the standard unabridged dictionary definition is identical with NFIP (hint: it isn’t). But what’s with all that other stuff? Why even specify a tsunami unless the idea is that being damaged as a result of being flattened by the weight of a 30-foot wave is somehow different than "a general and temporary condition of partial or complete inundation"? And why focus on "waterborne material"? If a huge wave picked up a boat and drove it through my wall, is that excluded by the standard form and covered as part of the NFIP flood?

The real question, from an insured perception, is if these parts of the water exclusion are meant to remove what the NFIP form covers, why not use the exact same wording in both forms and remove all the potential confusion?

With apologies to Sir Walter Scott, oh what a tangled web we create, when instead of simplify, we complicate.

Related: Read Chris Amrhein's column "Three Lessons Learned."

And why can’t we deliver a simple, elegant solution by creating, for example, a single "hurricane" policy that focuses on providing all the coverages currently scattered about in multiple policies as long as the damages arise, for example, from a named storm? Health insurance has long included "dread disease" policies, providing supplemental or high levels of coverage for specific conditions such as cancer or heart attack. Travel sites offer travel insurance covering a single trip. Wedding present floaters and special event policies (such as "hole-in-one" protection for golf tournaments) are long-time denizens of the property-casualty universe. Perhaps far too industry folks still fall prey to Henry Ford syndrome?

In every business magazine, every business site and every business conference, the topic is on all lips: the future belongs to the consumer. Maybe in the past the folks running the factories decided what to build and then hired others to sell it to the insureds, but the digital age has shifted the power base: increasingly it is now the consumer who determines the what, how and how much. The landscape is already littered with the corpses of those who ignored this shift in the tides. I suggest our industry is not immune.

So as we sail into 2012, let us accept the challenge: Begin evolving our product reality into our insured’s perceived reality. Therein lies the path to less friction, better coordination of coverages, less angst, better service—and a lot less E&O.

Gosh, from a single resolution: a win-win-win-win-win. Happy New Year, indeed!