Too hard to read

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Can companies rely on their policy documents if there is a dispute with a client over what is covered? 

Tuesday, January 31st 2012, 8:48AM 6 Comments

Perhaps not. If the ‘average client' has a reading capability below that of, say, a university graduate, but the complexity of the language is such that only someone with higher education might be expected to understand it, then they might fairly claim that no-matter how hard they read the document, it is not reasonable to expect them to understand it.    

Unfortunately many documents are too hard to read. If the document is too hard to read, or contains confusing material, then more weight must be placed on the advice given at the time the policy is sold.

That should concern advisers as much as clients. Advisers do not currently have lengthy sections in their reports dealing with the meaning of policy wordings. They assume that the client can read the document for themselves - yet many simply cannot do that.

A well-established measurement of reading ease (Flesch) scores documents by looking at two key measures - the ratio of long words in a sentence, and the ratio of words to a sentence.

Long sentences filled with long words are harder going. It's an inverse score. 60 or more means a primary school student can understand it.

In the range of 0 to 30 a university graduate-level skills are required. I've tested lots of policy wordings over the past few weeks and found everything from scores in the 90's (really easy to read) and scores as low as 2.5 (very hard).

A general shift towards standard policy wordings has also been underway in the past decade. Many sections are standard and schedules for individual benefits can then be tacked on.

Some companies went further and simply printed all the policy wordings in the one document, and refer to the schedule. That's another practice I think is confusing. With modern systems it is a simple matter to print and deliver only the wording that's required.

If it is costs insurers are worried about then don't print it - many clients would prefer the delivery online anyway.

Consumers often don't buy what they don't understand. Insurance is a category that is already tainted with suspicion - we know from confidence surveys (such as the one commissioned by Rabobank) that consumers worry payouts will not be made. The policy document should be the first stop for clarity - but as they stand at present, many are the starting point for confusion.

If that's adding risk to your advisory business, then that means you should be concerned about it. 

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