About half of your clients are hoping you can tell them what's in their own insurance policies, since the clients clearly aren't reading the policies themselves.
Only 55% of your clients read their policies once a year, according to research by TD Insurance. In some areas of Canada, like Alberta, that could sink down to more like 40%
And even that 40% figure might be flattering, brokers say, if it comes to reading more than the summary page of the policy.
“I think consumers are savvier than they used to be,” said Katie Mellor of Chris Mellor Insurance Brokers Ltd. “I think they take more time to read the policy documents. They look at the deductible. They look at things that are specifically printed up on the declaration page, and they question it.
“But I don’t think that even 50% of people read policy wordings. I think you get a few that might do it once, but never do it again.”
The TD Insurance poll, which canvassed the views of more than 2,500 Canadians, backs the notion that clients are more interested in their policies than the numbers might suggest. Only 19% of Canadians say they toss their policies aside because they simply aren’t interested in reading them.
Rather, 31% suggested the policy documents, which can sometimes run up to between 40 and 70 pages, are simply too complicated to understand – even though brokers told Insurance Business that their carriers use plain language much more frequently.
A further 31% of Canadians said they just didn’t have the time to go through them. Almost a quarter (23%) said they wouldn't ask their insurance provider to clarify any points of confusion because they were embarrassed by their lack of knowledge.
So they end up reading the declaration page at the front of the policy, which spells out the basics.
“People tend to look at that declarations page, the coverage summary, but their eye usually comes to the number, usually pretty big, which is the price,” said John Belyea, Moore-McLean Insurance Group. “We find even the review of the Dec page is not 100%, although we are finding more people are looking at that because they realize the importance. But to actually take the next step and read the policy, it doesn’t happen, and a lot of people don’t understand the fine print.”
Justin U’ran of Horizon Insurance Brokers Ltd. said it often takes a claim to focus the client’s mind on the policy wording and what it means.
“Trying to get people to read their policy and think about it before a claim is difficult,” he said. “They are willing to talk after and then it’s too late.”
A recent case in the B.C. Court of Appeal illustrates the danger of a client not reading a policy. The court found in favour of an insurance company that denied a travel insurance claim by a Victoria, B.C. couple.
The company denied the claim because the travel insurance policy contained an exclusion related to pre-existing medical conditions.
Just before a planned trip to California in early October, Sandra Turpin experienced abdominal pain on Sept. 23, 2007. She visited a walk-in clinic in Victoria the next day, and the physician who saw her did not prescribe any treatment. After taking antibiotics prescribed at the hospital, her pain subsided.
Her abdominal pain flared up again during the couple’s trip to California. She went to a hospital in California and racked up a bill of more than $27,000, before returning to Victoria, where she had an appendectomy.
The insurer said the her travel insurance policy clearly excluded pre-existing medical conditions that were not “stable” or “controlled” 90 days before the trip. She said the exclusions were ambiguous and, even if they were clear, she had a “reasonable expectation” of coverage nonetheless.
The appeal court ruled, however, that Turpin could not have had a reasonable expectation of coverage since she hadn’t read her policy – and the exclusions in the policy were crystal clear.
“With respect, it cannot be that simply requesting travel insurance, receiving a policy, and then not reading it can operate to create a reasonable expectation of coverage that will overcome the clear words of the policy,” the court ruled. “Indeed, it is difficult to understand how an insured could have a reasonable expectation of what loss may be covered if she has not read the policy.”
CORRECTION: An earlier version of this story inadvertently substituted the name Amy Mills of Christie Mills Insurance Brokers for that of Katie Mellor of Chris Mellor Insurance Brokers Ltd. Insurance Business apologizes for the error.
