ProtectionJul 16 2018

Insurance T&Cs as long as novels

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Insurance T&Cs as long as novels

Insurance terms and conditions have become so lengthy they rival short novels in terms of wordcount, data from Fairer Finance has found.

According to the figures, life insurance, critical illness and mortgage cover documents can reach over 24,000 words in length - the same level of words in novellas.

Of the three policies with the highest word counts, one is from Aegon and the other two are from Zurich. 

Aegon's life insurance product boasts a hefty 24,758 words, followed by Zurich's level protection cover at 24,102 and its decreasing mortgage cover, at 21,271 words long.

By way of comparison, Financial Adviser's research has found Richard Matheson's apocalyptic horror novella I Am Legend comes in at 25,204 words, while Ernest Hemingway's The Old Man and the Sea is just over 26,600 words and George Orwell's seminal political satire, Animal Farm, is 29,966 words long.

No-one's going to get behind you if you don't work on building trust. James Daley

A spokesperson for Zurich commented: "Some of our older protection policies do have lengthy T&Cs reflecting their complexity."

However, she added: "We’ll be addressing this through the launch of our new protection platform in the coming months with a focus on providing customers with simplicity.

"This includes reviewing our T&C’s and making them more customer friendly."

The spokesperson explained that, while T&Cs have a legal function, forming a contract with the customer, they do need to provide clarity and certainty about what’s included in different products. 

She added: "We’re reducing word count and making them more accessible by introducing simple tables and a more readable format. We’ll also be producing T&Cs for specific products, rather than generic ones to cover all, which will provide customers with all of the information they need."

An Aegon spokesperson said: “The word count of a particular document is not a reliable measure of whether customers have access to the information they want or need. We always aim to produce clear communications and summarise information for the reader where possible. 

"T&Cs documents are by their nature there to provide detail and with an advised proposition like ours, customers are receiving a recommendation to take out a policy based on the knowledge and experience of their adviser who will have a detailed understanding of features and terms of different providers.”

While life, critical illness and income protection are long enough, even worse are the T&Cs for general insurance - especially considering how the vast majority of general insurance products are sold direct to consumers without the helpful intervention of a financial adviser who can explain the finer points.

The most comprehensive cover is likely to use more words simply because there is more to explain. Kelly Thomas

According to the Fairer Finance data, seen by Financial Adviser, NFU Mutual's home insurance policy is a whopping 40,831 words long. 

In fact, six insurance policies covering home, travel and car, all from different providers, were more than 30,000 words long.

This beats even that king of wordsmithery, Charles Dickens, whose A Christmas Carol is just over 28,000 words, and probably makes for a much better screen play than the average home insurance document.

A spokesperson for NFU Mutual said while its policy wording is "very detailed – and something we look to refine each time we improve the policy – it isn’t a barrier to our customers getting the cover they need or the service they expect".

The spokesman added: "That’s because everyone who buys a home insurance policy with us will have a conversation about the level of cover they need. We, in turn, take the opportunity to highlight the features and benefits of the policy that match each customer’s needs."

This information is provided to customers in the insurance product information documents. 

The spokesman asseverated the length of a document did not detract from the service at point of claim, stating: "When our customers need to make a claim, they know we will aim to pay it. After all, we’re a Mutual, owned by and run for our members, the policyholders.

"We pay out on 98 per cent of all our home insurance claims and our dedicated claims handlers are there to talk our customers through the process and find a way to pay the claim."

James Daley, founder of Fairer Finance told a packed room at the Protection Review conference last week (12 July) that Vitality used to send out a 65,697 all-encompassing policy document to all clients, which covered T&Cs for all its products, even if the client only purchased life insurance.

However, Mr Daley later confirmed Vitality has now been working on reducing these significantly. It is understood the insurer now only sends out the all-encompassing document for consumers who have bought two or more types of cover.

Kelly Thomas, head of marketing for Vitality, commented: "The most comprehensive cover is likely to use more words simply because there is more to explain.

"What our customers receive is relevant to the specific type of cover they choose and many documents are very short. However, we can always improve and we are currently working on improving our policy documents."

In general, however, Mr Daley told the conference audience, such lengthy T&Cs are unnecessary, unclear and need to be tackled if the industry is to restore and rebuild trust with consumers.

You need to be authentic and connect with young people. It's vital that we find ways to engage with people. Poonam Bansal

He said: "The industry needs to deal with complexity, not just in product design but also in the language used. T&Cs do not need to be so long. Nobody will read this online or in print. You must simplify your policy documents."

He pointed out that while some critical illness definitions would, because of their medical nature, be difficult to simplify, it was possible to work with compliance and legal teams to provide easy-to-understand definitions of what these conditions are.

Mr Daley highlighted an alarming statistic: that just under half the UK population has an average reading age of 13 or less.

"And yet", he added, "Out of 22 life policies that [Fairer Finance] has examined, only four have a reading age of 13 or less. Tackling language in technical documents is important."

He added this was vital to building trust, not just in terms of the consumers but also in terms of government and advisers who want to support the benefits that insurance can bring to people in the UK. "No-one's going to get behind you if you don't work on building trust", he warned providers.

Also speaking at a panel session during the Protection Review conference was Poonam Bansal, head of acquisition marketing for Vitality, who agreed that language and communication was vital if more young people were to become insurance consumers.

She said: "You need to be authentic and connect with young people. It's vital that we find ways to engage with people."

simoney.kyriakou@ft.com