Have you ever received a car insurance bill in the mail and thought to yourself, “I don’t remember singing up for this!”? It’s a very common thing to have happen – to find charges or other “hidden” terms that you never knew existed. Until recently, that was the nature of the business.
The complicated, hard to grasp tiny print in insurance contracts did not start out to intentionally trick people. But it ended up doing so; and with the extra money insurance companies were making from their misleading policies, most companies were never balking at the knotty jargon and 2pt font.
What was the problem with the old car insurance contracts?
It led to the accepted culture of increasingly confusing policies. It led to most insurance companies being viewed as predators. But, since it is required by law to carry car insurance, these companies were devils you at least knew and kept close.
In 2009, however, some regulators had enough of the fixed game. A regulatory motion was set in place in ’09 with the goal to simplify the language contained within insurance policies and contracts. Supposedly, the motion was to be carried through within a year, but like with many things in the world of insurance, it took longer than expected.
Now in 2011, the Insurance Regulatory Authority is finally set to introduce simple, consumer-friendly car insurance policies that are easy to understand, contain no “hidden” language, and that are printed legibly.
How are things changing?
The team working on the policies contains 13 members and their task is to review not only car insurance at this current juncture but all classes of insurance business going forward. It is a reworking of insurance policies across the board, something that may take over a decade to institute fully.
One goal with the car insurance simplification is to ensure customers can differentiate one insurer from the other, thus finding the best deal. All benefits need to be laid out and fully comprehensible going forward, so each underwriter will have a competitive edge.
The new contracts, to become a business standard, cut out the fine print and promote the actual insurance policy instead of going around in the proverbial circle to benefit the insurance companies.
Sammy Makove, chief executive of the Insurance Regulatory Authority, claimed that these measures are “a response to the perception that cover policies are complicated and difficult to understand.”
What is a bit surprising in all this is that it took the regulatory body decades to realize just how disheartened consumers were.
Makove went on to say: “Consumers will be able to make informed choices about insurance products while being aware of their rights and responsibilities.”
With the goal being to put the ball back in the customer’s court, the IRA’s decision to go through with reworking insurance contracts should be well received across the consumer board and should catch on to other areas of insurance.