According to an investigation by UK-based consumer advocacy group Which?, many insurance policy documents require university-level reading skills and would pose a challenge to even some industry experts.

Who Suffers?

While this failing affects the majority of the UK population, groups that could struggle the most include people for whom English is not their first language, dyslexics and lower income brackets who are less likely to have attended higher education.

Which? used readability software to analyse 40 policy documents from the 10 largest car, home, pet and travel insurers. It examined the length of words and sentences to estimate how well-educated a reader needs to be to understand the language used in a text.

The tests revealed the average document was more unwieldy to read than Stephen Hawking’s A Brief History of Time and Dostoevsky’s Crime and Punishment – based on language rather than how easy the concepts are to grasp. One dyslexic participant said she “panicked” at the volume of text after she was asked to examine Aviva and Direct Line’s T&Cs.

What is Included in Travel Insurance?

Another investigation looked into how well 24 users could apply two policy wordings to real-life scenarios like how to a claim or report a change of circumstances. They were asked a series of questions about what was covered to see how well they understood the policy documents.

On average, participants answered five out of 16 of questions incorrectly when reviewing the travel insurance policy documents. For home insurance, the average was three out of 12.

Even a retired insurance professional, civil servants and software engineers were unable to answer all the questions correctly in the test. One participant said they felt a document they tested was written for “lawyers and solicitors” not for “everyday people”.

Insurance companies are aware of the issue of insurance policy wordings that are difficult to understand the majority of the UK population. While it is difficult to assess the reading age of the population, many estimates suggest the average resident has the reading skills of a 10 year old. Insurance documents meanwhile have 200 years of law precedent behind them with terminology that is agreed on and understood by legal professionals. For underwriters the process of simplifying these complex wordings – full of different circumstances and caveats – is very difficult.

Cheap Flights Need Travel Insurance

Travel insurance is perhaps the most important product for modern consumers. Cheap flights and hotels mean travelling the world has never been easier for the vast majority of UK residents. That means travel insurance to cover cancellation, delays and medical conditions is in high demand.

The latest industry statistics on travel insurance show the total claims settled in 2017 total £385 million, the highest since the ash cloud disruption of 2010. Insurers pay the equivalent of a claim every minute, but there remain concerns that customers do not always consider all of their needs before buying a policy.  The market for cheap travel products means cheap travel insurance is easily found but some policies may not cover consumers’ needs.

Which? tested policies from top travel insurers and found participants answered a third of questions relating to Santander’s travel insurance policy incorrectly and approximately one in four for Axa and Insure & Go.

Questions concerning when to report changes to a health condition were the toughest to answer, and participants failed this question two-thirds of the time. Claims worth thousands of pounds could be invalidated due to failure to report health condition changes at the correct time.

“Millions of insurance policies are bought every year, so it is worrying the policy documents are often far too complex for the average customer to understand, as our investigation suggests,” said Ceri Stanaway, Which? Money Editor. “Unclear insurance policies can have devastating consequences for customers, who could see their cover invalidated due to a misunderstanding.”

What Does Your Insurance Cover?

Stanaway said customers can use their insurer’s glossary to make sense of complex terms, “and should give their insurer a call if something is unclear, however, we want to see all insurance providers taking steps to cut out the jargon and make their policy documents easy for customers to get to grips with.”

In October 2018 the Association of British Insurers focused on the problem at its first ever travel insurance conference by expanding its consumer education plan – The Insurance Experiments – a website based on animations simplifying the process of buying insurance. For travel this confronts some of the very issues highlighted by Which?, such as how to tell your travel insurer about medical conditions.

“Travel insurers pay out more than a  million pounds every day to support customers who’ve encountered difficulties overseas, with some bills for medical expenses costing tens of thousands of pounds,” said Charlie Campbell, Senior Policy Adviser for travel insurance at the ABI.

“Given the importance of having the right cover when something goes wrong, our new Insurance Experiments are designed to encourage consumers to spend just a little longer thinking about the cover that they buy for their trips away. It’s important to not only look at the cost of the policy but to ensure it accurately reflects your personal circumstances, and takes account of where you’ll be going and what you’re likely to be doing.”