Articles - Professional indemnity insurance confusing the UKs SMEs

With evidence that jargon and technical language used by the insurance industry causes more problems than it solves, is it time for insurers to reconsider how they communicate? Explaining specialist or technical subjects calls for clarity.Unfortunately, a lack of clarity is where the insurance industry is failing. And it’s failing both itself and its customers.

 Kerri-Ann Hockley is head of customer service at professional insurance broker and Plain English Campaign Internet Crystal Mark holder, PolicyBee
 Take professional indemnity insurance as an example. We undertook research among 500 small businesses to establish how much or how little they understood about this type of insurance. One of the first questions we asked was for respondents to define the word ‘indemnity’.
 The results showed that 96% of small business owners couldn’t answer or answered incorrectly.
 A term describing a fundamental principle of insurance, and an essential benefit to a specific group of business insurance buyers, appears to be widely misunderstood or not understood at all.
 That presents an obvious problem: how can people be expected to buy something they don’t understand?
 Our research also shows 40% of small businesses don’t have professional indemnity insurance, despite the protection it provides. Are businesses actively not buying insurance they’d benefit from because they don’t understand it?
 Hidden meaning
 Awareness of the insurance and its protection isn’t the only problem.
 Of the businesses we talked to that had bought professional indemnity insurance, 3 out of 5 hadn’t read their policy wording.
 Perhaps understandably, it appears that reading a substantial insurance document is relatively low on the list of priorities for most small businesses.
 Insurers maintain there’s an obligation for policyholders to read their policy documents in order to understand the cover it provides. While that’s undeniably true, insurers aren’t helping policyholders do that if the language used in those documents is impenetrable.
 More saliently, insurers aren’t helping themselves either. There’s palpable cynicism among many policyholders that insurers largely serve their own interests. Common criticisms will be familiar to many in the industry, for example: insurers actively try to avoid paying claims; policies are full of evasive small print; insurers are opaque and unapproachable.
 Arguably, some of this cynicism stems from insurers using the kind of exclusive language apparently designed to keep policyholders in the dark.
 Coming to that conclusion is understandable when you consider there’s always an alternative.
 All change
 What can be done to improve the situation?
 Referring specifically to professional indemnity, we asked respondents if a simple name change would help.
 Unsurprisingly, 4 out of 5 small businesses said it would.
 They also said changing to a more obvious name would encourage more businesses to protect themselves.
 While that sounds straightforward, a name change could be problematic. The choices we offered in our survey ranged from the literal (‘muck up insurance’) to the rather long winded (‘business advice and services protection insurance’).
 However, more than half of those questioned thought the US version (‘errors and omissions insurance’) was the most appropriate.
 What’s clear is that insurance buyers are more responsive to everyday words than they are those used by the industry.
 Last word
 This is a point worth remembering, as it reflects a more general shift in market dynamics: buyers of insurance are, just like consumers in other industries, moving on.
 The democratisation of technology means people are no longer satisfied with the status quo. They want customer experiences to be on their terms and geared to their needs. That applies as much to language as it does to processes and systems – the proliferation of user-friendly, customer-focused personal banking apps is proof of that.
 In short, customers demand and deserve better. The insurance industry needs to change and firms that adapt to this user-driven shift will thrive.

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