Insurance experts have a semblance of view that policies have to be understood by the insurance buyers and the public though, however, they say this should not serve as the table to exfoliate the complete wrap of insurance, purge it of its meaning and create ambiguity for insurers.
High wired professionals from two different markets – developed and local, share the opinion that simplicity could at the end of the exercise become futile. Because, it will drill more holes in the simple words that will make it difficult for it to retain the purpose of cover and also put the insurer at a position that the policy offered loses its cover bearing.
Robert Merkin QC, Prof of Law, Universities of Exeter & Reading England, and International Insurance Law Consultant, said there is always a difficult point to get to with the assumption that making the policy simpler makes life easier.
Prof Merkin, who was a resource person at a webinar hosted by First Law & Impact Consulting Limited, Lagos, gives more background: “When we talk about indemnity, how many of us would have thought that `as new` and `when new` mean different things. But that was a test case in New Zealand. How many of us know what the word loss means. Does it mean loss of possession, loss of damage, loss of ability to use. It depends upon the circumstance.
He explained that “just because you use words that are simple doesn’t mean you have eased the problem. Because simple words have not simple meaning.”
Another resource person at the webinar, Ms Adetola Adegbayi, Executive director, general insurance, Leadway Assurance Company Limited, said policy wordings vary from risk to risk and also the class of society the policy serves.
Adegbayi said standardisation is where the issue is, according to her, that is the hub of insurance wording. She said insurers have adopted policies which over time have gained acceptance because of precedence that these policies have been subject to litigations and the court had adjudicated. “So when insurers are reluctant to reword certain words of a contract, it’s because of the fact that they do not want to let go of the body precedents upon which that contract lies.”
Besides, she said when insurance contracts are simplified to a point of ambiguity, “by the law of insurance contract that ambiguity is construed against the insurer. So insurers again are very careful not to allow simplification to lead to ambiguity.”
She also said lawyers need to get into the circle, pointing out that it is important that lawyers in practice help to work with insurance companies to look at wordings, “purely wordings and again to understand the underwriting behind the wordings.”
Adegbayi said the words are not chosen for the purpose of English language expression. “They are there because they need to spell out what is being covered, not being covered, and what is being covered and under which terms and conditions.”