The importance of policy wording clarity and certainty in the insurance market

Abstract

The main objective of this dissertation is give an overview of what constitutes clear and certain policy wordings that are not understood only by an insurance expert but also by the common man or woman. This first part of the research study deals with questionnaires distributed to prospective policyholders and insureds so as to know how much importance they give to policy wordings and if they ever had disagreements with insurance companies because of policy wordings' clarity. The analyzed data reveals that respondents give a lot of importance to policy wordings' but this contrasts with the data gathered from the Claims Managers and underwriter interviews. The second part of the dissertation deals with an analysis of the data gathered from the interviews. The part that follows concerns that dealing with a comparison of the data gathered from the different research methods mentioned above. One of the main conclusions of this dissertation is that policy wordings' clarity is very important to the insurance market so as to engender more trust between the parties participating in a contract. Disagreements between the parties could be minimized by clearer policy wordings. Insurance companies are aware that they need to have clear policy wordings that can be understood by most of the policyholders. A recommendation for the local insurance market could be that of having policy wordings which are specifically constructed for the Maltese insurance market not constructed in other counties and then adapted to the Maltese context. Contracts should bear the clear crystal mark assuring policy wordings have been tried and tested ensuring that they can be understood by an ordinary person.