Seven deadly sins of the policy document

As an industry we should pay more attention to them and make them work better for us. After years spent analysing hundreds of policy documents, as well as haggling over them in disputes, we have a view about what makes them difficult. These are the main problems with insurance contracts and our prescriptions for fixing them – and workarounds for those of us that still have to use them in the meantime.

1. Keeping it secret – here’s a tip. If an insurer makes it hard to look at their policy before you buy it, just don’t. If the terms of the deal aren’t properly the subject of the sales process, what is?

2.Too long – the client bought life insurance, which pays if you die. But the document is routinely dozens of pages long and some run to over 100 pages. They describe all sorts of things the customer did not buy. In this age of mass customisation and environmental consciousness I cannot understand why.

3. Too many hard words – they require a level of comprehension not common amongst the buying public. There are lots of ways of measuring this, but we have tested every single policy wording in the New Zealand market and every policy has at least one benefit described in language so complex it would be illegal in some parts of the world. Having said that some documents are considerably better than others.

4. Weird structure – you need to read the ‘base wording’ and the ‘schedule’ and the ‘benefit definition’ and check the special definitions of any words that are capitalised or shown in bold in the ‘definitions’ section. I suppose we should be grateful there aren’t two slightly different versions in different languages… but seriously, if you need multiple post-it notes to mark four places in the document to understand what gets paid, how can the average Joe or Joanne be expected to be across this? Weird structure is a legacy of a time when printing was difficult. But it ceased to become difficult to create personalised reports nearly twenty years ago. Today, you don’t even have to send most consumers a paper document. It is 2016.