Insurance policy wordings - too complex?

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A couple confused by their travel insurance documentation.
Travel insurance

According to an investigation by UK-based consumer advocacy group Which?, many insurance policy documents require university-level reading skills and would pose a challenge to even some industry experts.

As part of the investigation, Which? ran 40 policy documents from 10 major travel, home, car and pet insurers through readability software, to ascertain what level of comprehension skill a reader would need to possess in order to fully understand everything written. According to the results, the average document required a higher level of reading ability than a reader would need to possess to understand Stephen Hawking’s A Brief History Of Time, and Which? said that this would pose a problem for 43 per cent of working adults with a GCSE reading ability of grade C or below.

Separately, the consumer group also showed policy documents to a retired insurance professional, some software engineers and some civil servants and asked them questions, finding that they were unable to answer all the questions correctly. On average, five out of 16 questions related to travel insurance documents were incorrect, while three out of 12 questions related to home insurance were found to be incorrect. It is the opinion of Which? that the average policyholder should be able to answer all policy questions correctly, as a lapse in understanding could be the difference between a successful experience and a hugely costly mistake.

When it came to the travel insurance document, those surveyed found it hardest to answer questions related to when to report changes to a health condition.

“Millions of insurance policies are bought every year, so it is worrying the policy documents are often far too complex for the average customer to understand, as our investigation suggests,” said Ceri Stanaway, Money Editor at Which?. “Unclear insurance policies can have devastating consequences for customers, who could see their cover invalidated due to a misunderstanding. Customers can use their insurer’s glossary to make sense of complex terms and should give their insurer a call if something is unclear; however, we want to see all insurance providers taking steps to cut out the jargon and make their policy documents easy for customers to get to grips with.”

Industry response
Malcolm Tarling, a spokesman for the Association of British Insurers, commented: “No insurer wants confused customers. They continually review their customer communications, including policy documents, so that they are as clear and easy to understand as possible, while meeting strict regulatory and legal requirements. Anyone who is unclear on any aspect of their cover should always contact their insurer for clarification.”

Santander, whose travel insurance policy was included in the investigation, said that while it was ‘committed to making our insurance offering as simple for our customers as possible ... the scenarios offered by Which? have been a helpful indicator of where the language used may be simplified for use in future’.

The policy wording question is a tale as old as time, and not as black and white as it is often presented – after all, travel insurance is a complicated product, and there is only so far that the wording can be simplified before important details start getting missed out. However, it is very important that a happy medium be found where all the relevant information is still presented to the customer, but in as clear and concise a manner as possible.

Or at least, a little clearer and more concise than A Brief History of Time