Life insurers must say what they mean and mean what they say

January 2007

The new National Credit Act and various other pieces of legislation have in recent years placed increased emphasis on the obligation of the financial services sector to provide consumers with information in plain and understandable language.

However, the move towards using plain English has yet to gain considerable momentum in the life insurance industry where consumers are still battling to crack the lingo and interpret the fine print in their policy books and contracts.

This is according to 1Lifedirect CEO, Lenerd Louw, who says that life insurance companies could be doing much more to improve and simplify the way in which they communicate with their clients.

"Over the past couple of years, new legislation and regulation have entrenched the consumers’ right to information in plain, simple, understandable language, and the onus is on insurers now to recognise this right and take the necessary steps to comply.

"People are still baffled by the fine print and insurance jargon typically used in insurance policy handbooks and contracts, and one can understand their frustration of having to translate, or try to anyway, what they are reading into plain English.

"While some insurers have been quick off the mark to implement the necessary changes, others haven’t, and there is definitely room for improvement in our industry. Increased clarity and transparency is not only good for consumers, but for business and the industry as a whole as well. Life insurance is a long term investment and the focus should be on building long-term partnerships with clients, so the intention should not be to trick or mislead them," says Louw.

According to Louw, 1Lifedirect was launched in March 2006 with the vision of transforming the South African life insurance industry into something that is customer friendly, service-orientated, educational and well-informed. Central to this is its drive to provide consumers with information that is clear, concise and easy to understand.

The 1Lifedirect policy book bears the Readability Mark from Plain Business Writing, which means that the document complies with specific readability criteria.

"We have a no frills, no fuss approach to communication and in all our interactions with clients, we strive to keep it simple. Our policy book is written in plain language, in a logical structure with clean layout and descriptive headlines. We have also included a comprehensive list of standard life insurance definitions to ensure that our clients can understand what the phrases we use actually mean.

"Our aim is to get to the point so that clients understand their cover benefits and the details of the cover they are paying for, as well as any restrictions, waiting periods or exclusion that may apply. Insurance does not have to be complicated," says Louw.

Louw concludes saying that consumers should exercise their right to information in plain language and insist on getting clarity when they aren’t exactly sure of what they are signing up for.

"To avoid getting into messy situations later on, find out what the insurance terms in your contract mean before you choose an insurance provider. Know exactly what you are getting into and what you can expect to get out before you sign on the dotted line."

ISSUED ON BEHALF OF 1LIFEDIRECT BY THE MAIL ROOM. FOR MORE INFORMATION PLEASE CONTACT JOLENE CHAIT ON 084 433 9198 OR E-MAIL Jolene@themailroom.co.za