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Why do insurers overcomplicate their language?


In insurance coverage, LANGUAGE is a software for differentiation. Coverage language could make one insurer stand out from the following. I perceive that. In reality, that’s what I attempt to do each single day – make my articles stand out (via my selection of language) from the following.

What I don’t perceive is the trade’s insistence on utilizing completely different phrases to confer with the identical factor. Too typically, insurance coverage professionals are instructed (I imagine by their authorized departments) to make use of particular language and toe the occasion line. How these corporations got here up with these phrases is (I imagine) subjective – and that’s actually not what we’d like in a fancy trade like insurance coverage.

The time period ‘HARD MARKET’ is an ideal instance of this.

The Worldwide Threat Administration and Insurance coverage society (IRMI) defines a tough market as: “The upswing in a market cycle, when premiums enhance and capability for many forms of insurance coverage decreases. This may be brought on by numerous components, together with falling funding returns for insurers, will increase in frequency or severity of losses, and regulatory intervention deemed to be in opposition to the pursuits of insurers.”

Learn extra: All eyes on cyber: The celeb of economic insurance coverage

Some insurance coverage professionals are adamant that the industrial insurance coverage market has been ‘HARD’ for the previous two years. Nevertheless, some are avoiding the phrase ‘HARD’, as a substitute choosing ‘TIGHT’ and even ‘FIRM’.

What’s the distinction? Why the language differentiation? How can the trade justify utilizing completely different phrases to explain the identical market? Just about all industrial insurers have felt the circumstances specified by the IRMI’s definition of a tough market. So, why beat across the bush? Name the market what it’s.

To fulfill my nerdy language intrigue, I made a decision to lookup Collins Dictionary definitions of the three phrases ‘HARD’, ‘TIGHT’, and ‘FIRM’:

HARD (adj): One thing that’s exhausting may be very tough to do or cope with.

Synonyms: tough, concerned, advanced, sophisticated

TIGHT (adj): Tight controls or guidelines are very strict.

Synonyms: strict, stringent, extreme, powerful 

FIRM (adj): If a worth, worth, or forex is agency, it’s not lowering in worth or quantity.

Synonyms: hardness, resistance, density, rigidity 

What involves thoughts is the phrase: ‘Identical, similar, however completely different’. Every phrase has a unique that means, however the overarching themes are ‘CHALLENGING’, ‘STRICT’, ‘COMPEX’, and ‘RIGID’, that are additionally phrases used to explain the industrial insurance coverage market lately.

To complicate issues, some corporations favor to not use any of the above phrases, and so they favor to make use of the time period ‘TRANSITIONING MARKET’ – referring to the corrective actions and adjustments the market is making in response to the circumstances described within the IRMI’s definition of a tough market.

Learn extra: Brokers – underwriters: You scratch my again, I am going to scratch yours

I’ve a singular perception into this linguistic battleground. I interview all types of corporations within the trade, from insurers to brokers and companies, MGA/MGUs, reinsurers, insurtechs, regulation corporations, and consultancies – and so they all have their ‘most well-liked’ phrases, which I then should relay (particularly when quoting). However once more, these are completely different phrases for a similar factor.

The newest phrase dispute I’ve observed revolves across the altering market circumstances. By 2022, the industrial insurance coverage market has improved throughout many traces (with just a few exceptions, like cyber insurance coverage). To explain this, some insurers are utilizing the phrase ‘MODERATING’, whereas others are utilizing ‘STABILIZING’. Once more, not quite a lot of distinction there.

Why can’t the insurers simply choose one time period and roll with it? I’m positive that extra readability and consistency would go down properly with brokers and brokers – who’re presently having to demystify insurers’ language with shoppers. Additionally, I believe it’s a secure wager that shoppers don’t care should you use ‘HARD’, ‘TIGHT’ or ‘FIRM’. They only need to perceive why their premiums have gone up or why their protection has modified – and so they need that rationalization in plain, easy language.

In making an attempt to distinguish themselves via phrases, insurers are (maybe inadvertently) additional complicating this already advanced trade. Get actual everybody. Whether or not you say ‘TOMAYTO’ or ‘TOMAHTO’ – it’s nonetheless merely TOMATO.

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