IVASS seeks more clarity in insurance policy wordings

On 26 June 2023, the Insurance Supervisory Authority (IVASS) organized a workshop focused on “Simplification of Insurance Contracts”. The aim of the meeting was to discuss the results of a recent scientific research study on the clarity and language of insurance contracts.

The research, conducted by Baffi Carefin's Insurance Market Observatory at Bocconi University, analyzed in detail 30 different personal accident insurance contracts distributed in the Italian market. The analysis identified several areas that could be improved, ranging from the language used to the graphic presentation.

IVASS plans to use the findings as a basis for initiating a dialogue in the insurance industry, continuing the progress made since the publication of the ANIA guidelines on simple and clear contracts in 2018.¹

According to IVASS, the goal of simplification has not yet been fully achieved. Numerous complaints from policyholders indicate a lack of clear communication by companies, particularly to customers who may not be well-versed in insurance and legal matters.

The study of the selected insurance contracts revealed various critical issues, including:

• excessive length and complexity with numerous subordinate clauses in the text;
• use of complex and technical terms that are difficult for the layperson to understand;
• use of English terms;
• typos;
• inconsistency in the use of graphical elements.

In light of these findings, IVASS asked the companies involved in the scientific study to inform the Supervisory Authority by September 30, 2023, about the measures they plan to undertake to simplify and enhance the clarity of the analyzed contracts.

This is a new element insurance companies and intermediaries engaged in the writing of insurance contracts have to take into account.

As the findings of the scientific study hold significant weight, we can expect the Authority to embrace them as a fresh reference point for assessing the comprehensibility and transparency of insurance policy wordings. It’s also likely the results will affect other kinds of insurance contracts (different from accident insurances).

The study of the selected insurance contracts revealed various critical issues, including:

• excessive length and complexity with numerous subordinate clauses in the text;
• use of complex and technical terms that are difficult for the layperson to understand;
• use of English terms;
• typos;
• inconsistency in the use of graphical elements.

In light of these findings, IVASS asked the companies involved in the scientific study to inform the Supervisory Authority by September 30, 2023, about the measures they plan to undertake to simplify and enhance the clarity of the analyzed contracts.

This is a new element insurance companies and intermediaries engaged in the writing of insurance contracts have to take into account.

As the findings of the scientific study hold significant weight, we can expect the Authority to embrace them as a fresh reference point for assessing the comprehensibility and transparency of insurance policy wordings. It’s also likely the results will affect other kinds of insurance contracts (different from accident insurances).

¹With Letter to the market of April 18, 2018, on the simplification of insurance contracts IVASS required insurance companies to re-write their insurance contracts following the ANIA guidelines on simple and clear contracts.