Canadian Underwriter

How Lloyd’s says the industry can make commercial policies easier to read

October 21, 2020   by Greg Meckbach

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Traditional insurance policies can be hard to read on mobile devices and legalistic language can make them difficult to understand, Lloyd’s suggested in a recent report.

The design and format of policy documents is important, Lloyd’s said in Building simpler insurance products to better protect customers, a report released Oct. 12.

“Many traditional policy documents can also be hard for customers to read and digest on their preferred devices, for example on tablets or mobile phones.”

Key factors in the design of documents, which affect the readability of the contract, include use of white space on the page, font size, paragraph layout and use of colour, Lloyds said in the report, which was prepared in collaboration with Lloyd’s Global and UK Advisory Committees.

Also, a European Union rule for carriers and brokers could be used more widely to make it easier for commercial clients to understand their coverages, Lloyd’s suggested.

The EU’s Insurance Distribution Directive, which applies to insurers as well as intermediaries, was released in 2016. It is meant to give basic information about non-life consumer insurance,  the obligations of the parties, claims handling, and a summary of the cover. With that directive, the EU introduced standardized product information documents for non-life products, Lloyd’s said.

“Similar standardized summary documents could be used more widely for commercial insurance to provide the same benefits,” said Lloyd’s “If they also link to the different sections of the contract where further detail is available, this could provide an easy reference point to help customers quickly navigate the key contract components.”

COVID-19 was declared a pandemic Mar. 11 by the World Health Organization. The massive economic disruption has resulted in a variety of ongoing measures to minimize the time people spend within a few metres of others from outside their households.

“While the global insurance industry’s response and recovery efforts continue to expand through claims payments, charitable donations, and product innovation, there have been distinct complications that have arisen from pandemic insurance coverage uncertainty and resulting court disputes between insurers and their customers,” Lloyds said Oct. 12 in a release announcing its new report, which is aimed at making products simpler and improving clients’ understanding of coverages.

“Insurance documents often contain complex technical and legalistic language. While this may make it easier to comprehensively codify the cover provided, it can make documents difficult to understand, particularly for customers without a dedicated risk management function,” Lloyds said in the report.


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