Why the insurance industry needs to mind its language

In recent years, there has been a big focus in the insurance sector on customer outcomes, customer satisfaction, and a general shift in mindset that brings service front and centre of everything we do.

But while much good work has been done in this space, I believe that as a whole the industry is still not thinking hard enough about how we talk to, and about, our customers.

At its heart, insurance is a service industry built on a promise. Customers don’t buy policies because they enjoy reading terms and conditions, but rather for reassurance and support at moments that can often be stressful and emotionally charged.

Insurance documentation is filled with language that makes perfect sense internally but creates uncertainty for customers. Terms like exclusions and excesses are familiar within the market, but they are not natural language for most people. Yet large parts of the industry continues to write as though the customer shares the industry’s vocabulary.

Clare Knight, Bspoke Underwriting

In this context, the words insurers use, for example in their policy wordings and claims communications, have a direct effect on how customers experience the product they have bought. But as an industry we still haven’t quite got our head around what clear communication actually means, and how this translates into customer outcomes.

Revaluate

Back in 2018, Browne Jacobson, in partnership with linguistics experts at the University of Nottingham, determined that by reducing the reading age of the hardest to understand insurance policy to that of a 12-year-old, they increased the number of people who could understand the policy from just over one in 10 to 89%, becoming accessible to an estimated 40 million more people in the process. 

This isn’t to say, of course, that we need to treat customers like children, but rather that we should endeavour to make our communications as straight forward and accessible as possible.

Eight years after this research was conducted, large parts of the insurance industry are still far too opaque in their customer communications, and the language they use is a large part of the problem.

Complications

It’s easy to see how we got here. 

Insurance documentation is filled with language that makes perfect sense internally but creates uncertainty for customers. Terms like exclusions and excesses are familiar within the market, but they are not natural language for most people. Yet large parts of the industry continues to write as though the customer shares the industry’s vocabulary. 

If a customer does not understand what they have bought, what is covered, or what they are expected to do, poor outcomes should not always be treated as customer misunderstanding. 

Often, they are the entirely predictable result of insurer language that was never designed for real-world comprehension in the first place.

Storm damage is a good example. Policyholders may not know how a storm is defined. They may not realise fences, gates or outbuildings are treated differently, or they may not understand the distinction between one-off events and gradual damage. 

This language failure can quickly become operational failure, increasing unnecessary calls, avoidable claims notifications, repeat contacts and lengthy post-event explanations. 

Claims teams spend more time translating wording rather than resolving problems, while customer service teams are left managing confusion that could have been prevented earlier in the journey. As a result, the cost is borne by both the insurer and the customer.

This is why language should not be seen as a cosmetic issue or a “communications” task sitting at the edges of the business. I believe that we should view language as part of product design.

Internal

Further to this, if the industry is serious about customer outcomes, it should start by examining the words it uses internally as well as externally. 

When firms describe an experience as “satisfactory”, that may make sense from an operational perspective, but it says nothing about whether the customer felt informed, supported or treated fairly. Far more often, we need to be discussing customer delight, rather than just customer satisfaction.

'Good outcomes' should not be the ceiling. Insurers should be aiming for informed customers, and experiences that feel clear and fair even when the answer is no.

Other sectors have already moved further in this direction. They understand that communication should work for the person receiving it, not just the business sending it. Insurance has been slower to change, perhaps because complexity has become normalised.

But the commercial case for change is clear. Customers choose their provider partly based the belief that the business will be there for them when needed. 

Firms that communicate clearly, reduce friction and make policies easier to navigate won’t just improve customer outcomes, but they will reduce unnecessary cost, improve retention and stand out in a market where meaningful differentiation can often be difficult.