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Why Should the Insurance Industry Use Readability Formulas?
An insurance policy is a legal document between the insurance company and the policyholder, and entails serious legal implications in case of a dispute. The insurance contract involves an elaborate documentation explaining the powers and liabilities of the parties to the contract. It contains lots of legalese and is often difficult to decipher the exact requirements and implications of an insurance policy.
This difficult-to-read document is one major reason insurance disputes go to court. To help policyholders understand their policies, insurance companies should write their insurance documents in plain English, using simple words and sentences. Readability formulas can help the insurance industry in simplifying their documents.
Here are reasons the insurance industry should use readability formulas:
1. Every policyholder must understand (and wants to understand) their insurance policies. Excessive use of legal terminology bewilders and frustrates most policyholders. While it is important the insurance policy is formal enough to not look like an advertising brochure, it should be informal enough to make for easy reading. The challenge is writing a readable legal document that an average American citizen can read and understand. Revising the insurance policy can help reduce the reading level of the policy. Readability formulas can help in assessing the reading-level of the drafted policy. Insurance experts can revise the contract by removing difficult words and replacing them with easier ones. Long sentences can also be divided into short sentences.
2. Certain US jurisdictions have found that using readability formulas in the insurance industry is important. For instance, the State of Massachusetts has incorporated the Flesch test into their legislation, which forces insurance policies to have a minimum score of 50. Many states are trying to improve consumer-friendly legislation so consumers are fully aware about every clause and sub-clause of a legal document. This idea is derived from the Latin phrase consensus ad idem, which means that parties to a contract understand its subject matter and implications in the same sense.
3. The policyholder should know the premium he has to pay, frequency of payments, specific exclusions to the claim, his duties and responsibilities, disclaimers, disclosures, and so on. A difficult-to-read insurance policy frustrates and bewilders most policyholders to understand the policys small print. The website, ReadabilityFormulas.com recommends using the Flesch-Kincaid, Cloze Test or FOG Index formulas for all insurance documents.
4. Consumers will never buy an insurance product that they find confusing. If the policy lacks cohesion, the prospective consumer is more likely to search for a different insurance company. If you can present the same information in simpler details, you can convince even the most uninterested customers to buy a policy.