Why do insurers overcomplicate their language?



In insurance coverage, LANGUAGE is a instrument for differentiation. Coverage language could make one insurer stand out from the following. I perceive that. The truth is, 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 business’s insistence on utilizing completely different phrases to discuss with the identical factor. Too typically, insurance coverage professionals are advised (I imagine by their authorized departments) to make use of particular language and toe the get together line. How these firms got here up with these phrases is (I imagine) subjective – and that’s actually not what we’d like in a posh business like insurance coverage.

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

The Worldwide Danger 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 attributable to 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 movie star of business insurance coverage

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

What’s the distinction? Why the language differentiation? How can the business 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 arduous could be very troublesome to do or cope with.

Synonyms: troublesome, concerned, complicated, sophisticated

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

Synonyms: strict, stringent, extreme, robust 

FIRM (adj): If a worth, worth, or forex is agency, it isn’t 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 which means, however the overarching themes are ‘CHALLENGING’, ‘STRICT’, ‘COMPEX’, and ‘RIGID’, that are additionally phrases used to explain the industrial insurance coverage market in recent times.

To complicate issues, some firms desire to not use any of the above phrases, and so they desire 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 will scratch yours

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

The most recent phrase dispute I’ve observed revolves across the altering market circumstances. By means of 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 plenty of distinction there.

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

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



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