Who hasn’t heard of the saying ‘keep it short and simple’? Probably no-one, yet it seems insurance policies still haven’t applied the message as a new study finds not even a fifth of policyholders in the UK understand them.
Research carried out by the University of Nottingham, in partnership with insurance law firm Browne Jacobson, has revealed that insurance policies are too complex to comprehend. In fact, only 13% get it. In addition, it turns out policies require a minimum of A-level education in order to be meaningfully understood.
For instance, barriers such as the extensive use of uncommon or low frequency words and phrases hinder comprehension. Other culprits include complex sentence and paragraph structures.
The good news is, wording troubles can be remedied.
The same study used drafting methodologies in order to significantly improve policy readability, reducing the ‘reading age’ for the most complex document from postgraduate level to 12 or 13 years old. This improved the percentage from the previous 13% to a whopping 89%.
“To knock 10 years of education requirement off the wording was certainly more than we expected before we undertook the research,” said Browne Jacobson insurance partner Tim Johnson. “From the discussions we have had across the industry there is almost universal acceptance that the current level of complexity needs to be addressed.
“There is no silver bullet but we have demonstrated that through the use of a range of drafting techniques, including the use of eye-tracking software, we can significantly increase the number of people who can easily read and understand the cover they have purchased.”
The eye-tracking technology referred to by Johnson is able to pinpoint where the eye focuses, to identify words that receive a significantly greater amount of attention and those that are skipped altogether.
“With this data, it is possible to identify language processing ‘bottlenecks’ where participants had to stop and spend much longer than expected trying to understand the text,” read the report. “The research team was able to study the ‘bottlenecks’ and draw precise conclusions as to what key words, phrases, and language constructions were particularly difficult to understand.”
The linguistic research, which was funded by the Higher Education Innovation Fund and the European Union, also found that sentences should generally be kept as short as possible. According to the study, most readers’ mental processing ability significantly declines once a sentence exceeds 26 words.
“Drafting a perfectly worded policy document is virtually impossible, but what our research proves is that there clearly is a lot that can be done to improve how they are currently written,” said Dr Kay Snowley, business development manager from the university’s Linguistic Profiling for Professionals (LiPP) unit. “Each finding shows that with a little alteration, over time, the overall readability and understanding of these documents can be improved.
“This isn’t just helpful for the individual but is much better for the companies issuing them. There is no benefit for there to be doubt in people’s minds as to what and how they are covered by a policy.”
The report also cited literacy skills in the UK, which are predicted to decrease over time.
“The insurance industry has a regulatory duty to ensure the information in policies and contracts is clear and expressed in plain and intelligible language,” added Johnson. “Failure to do so could not only make them harder to sell but leaves the industry vulnerable to legal challenge from policyholders and the real possibility of further regulatory intervention.”
