Consumer body Which? has undertaken research into the length of insurers’ motor, home and travel policy documentation and found that 17 out of the 40 policies analysed had policy wordings that were over 50 pages long. Which? also found that some companies’ travel policies were over 32,000 words in length – longer than George Orwell’s Animal Farm and John Steinbeck’s Of Mice and Men. The longest travel policy reviewed by Which? was found to be over 38,248 words which would take an average person two and a quarter hours to read.
Firms are reminded about their obligations to Treat Customers Fairly (FCA Principle 6) and have policy conditions that are clear, fair and not misleading (FCA Principle 7). In addition, the Consumer Rights Act 2015 (the Act) both consolidates and clarifies existing consumer legislation on unfair contract terms, removing conflicting overlaps between the Unfair Contract Terms Act 1977 and the Unfair Terms in Consumer Contracts Regulations 1999. The Act does not reform the essential position currently applied to contracts of insurance that core terms such as exclusions cannot be assessed for fairness, however, under the Act a term may only be excluded from an assessment for fairness where it is both transparent and prominent.
A term is transparent where it is expressed in plain and intelligible language and (when written) is legible. The prominence of the term will be determined by how it was brought to the consumer’s attention (in such a way that the average consumer would be aware of it). An average consumer is one who is ‘reasonably well-informed, observant and circumspect’. Clearly therefore, onerous exclusions will need to be prominently set out in order to avoid an assessment for unfairness. If consumer policy wordings are longer than works of literature it is extremely unlikely that exclusions buried deep in the policy and not drawn to the customer’s attention will meet the new requirements for fairness.
Insurers should take note of the research by Which? and follow best practice by ensuring that all consumer policies are concise, clear and transparent. All consumer policies should be reviewed to ensure that they are easily understood.