How clear are your policy wordings?
The University of Nottingham, in collaboration with Browne Jacobson, has undertaken a detailed academic study into the readability of insurance policies, with some fascinating results.
The University of Nottingham, in collaboration with Browne Jacobson, has undertaken a detailed academic study into the readability of insurance policies, with some fascinating results.
The main findings from the study are that:
- all policies reviewed required education to at least A-level (and in most cases graduate or postgraduate level) in order to be meaningfully understood;
- policyholders routinely find it difficult to understand what is and what is not covered, when given real-life scenarios (comprehension ranged from between 32% and 66%);
- the least-readable policy that was tested could only be meaningfully understood by 13.4% of the UK adult population.
The study firmly indicates that the high reading age (the estimate of number of years of formal education required to understand a text) of the policies has a material impact upon a policyholder’s understanding of the cover.
However, the study also revealed that by applying the drafting methodologies summarised in this report, it is possible to significantly improve the readability of policy wordings and to improve comprehension. For example, it was possible to reduce the reading age of one policy by 10 years from doctorate level to that of a Year 8 pupil (i.e. a 12-to 13-year-old). This increased the estimated percentage of the UK population that could understand the policy by some 75%, from 13.4% to 89% (an increase of 40.4 million people).
Overall, the study shows that much can be done to improve the readability of policy wordings, and that there are significant benefits for those insurers that do so. It will be interesting to see how the market responds to increased knowledge about how individuals read and understand policy wordings.
To view details of the full study, please click below:
Contact
Tim Johnson
Partner
tim.johnson@brownejacobson.com
+44 (0)115 976 6557
Related expertise
You may be interested in...
Legal Update
Understanding the ICO's new fining guidance
Legal Update
Unravelling the challenges and opportunities in UK sports governance
Press Release
Browne Jacobson advises European micromobility insurtech Laka on investment from Achmea Innovation Fund
Legal Update
Cyber-attacks in UK universities: Why failing to prepare is no longer an option
Legal Update - The Word
The Word, March 2024
Opinion
Caregivers at work: Navigating new carer's leave regulations
Legal Update
Commercial Court considers requests for stay or anti-suit injunction where two competing reinsurance wordings
Opinion
EHRC publishes new guidance on menopause and the workplace
Legal Update
Parametric flood policies - Insurers no longer in uncharted waters?
Legal Update
LockBit unlocked: International taskforce takes down major cyber criminal organisation
Legal Update - Consumer Duty
80% of GAP market pause sales amid Consumer Duty concerns
Legal Update
FCA writes to MPs over car insurance premiums. What do increases mean for fraud?
Legal Update
Biodiversity Net Gain: A new landscape for restoration clauses
Legal Update
The regulators’ pet project
Legal Update
Welsh Government inks new regulations for Acupuncture, Body piercing, Electrolysis and Tattooing
Legal Update
Insurance and the escalating situation in Suez Canal
Legal Update
Update: Further debates on the Automated Vehicles Bill in the House of Lords this month
Legal Update - The Word
The Word, February 2024
Legal Update
The Home Affairs Committee launched another inquiry into fraud - Stop! Think Fraud
Legal Update
Progress on the Automated Vehicles Bill
Legal Update - The Word
The Word, January 2024
Legal Update
Voldemort causes havoc at Sellafield – nuclear risks and insurance policies
Legal Update
A blow to manufacturers as Thai Court confirms insurers’ denial of cover in wind turbine case
Legal Update
Adapting to change or falling behind? The FCA under fire from the National Audit Office
Legal Update
Premium finance – a poverty premium
Legal Update
'Clear and unambiguous' exclusions: Cameron Soule v Woodward Design + Build LLC
Legal Update
Follow the leader: Insurers using algorithmic underwriting
Legal Update
Insurance Insights 2024
Legal Update
Statutory assignment to insurers not caught by no-assignment clause
Legal Update
Court of Appeal decision again demonstrates the need for reform of the Solicitors Minimum Terms
Legal Update - The Word
The Word, December 2023
Legal Update - London Market Quarterly
London Market, Autumn 2023: What the insurance market needs to know
![Al Mana Lifestyle Trading L.L.C. & Others v United Fidelity Insurance Company PSC & Others [2023] EWCA Civ 61 – Update](/getattachment/b24270a8-0bb3-4a8a-bcf0-37830f99591b/shutterstock_710149084_6x4.jpg?variant=HeroImageTabletVariantDefinition)
Legal Update
Al Mana Lifestyle Trading L.L.C. & Others v United Fidelity Insurance Company PSC & Others [2023] EWCA Civ 61 – Update
Legal Update
Proposed amendments to the Arbitration Act 1996
Legal Update
The downfall of Vesttoo: Fraudulent letters of credit
Legal Update
Chubb leads a $50m consortium to help mitigate the increasing risks associated with lithium-ion batteries
Legal Update
Climate change related insurance decisions being made around the world
Legal Update
D&O: Australian Courts consider the meaning of ‘personal advantage'
Legal Update
Trade credit: Australian Courts consider the meaning of ‘recoveries’
