Insureds let down by standardised wordings, Mactavish says

Claims resolution firm Mactavish says the rise of standardised commercial policies will increase disputes over claims and reduce trust in the insurance sector.

Bruce Hepburn, CEO at Mactavish said: “Clients are being let down by policies that are not fit for purpose. In an age of growing complexity, rather than crafting highly targeted wordings designed to meet clients’ unique requirements, brokers and insurers are increasingly developing one-size-fits-all approaches.”

He added: “Worse, the basis for those standardised policies is often unnecessarily complex and isn’t readily understood by the policyholder. With COVID-19 for example, many companies find they are covered against the unlikely event of bubonic plague but not against new diseases like coronavirus.”

Not all agreed. Adrian Leonard, market commentator and trustee of the Insurance Museum, said: “After a few years in use, almost every word of a standard policy’s language will have been disputed and clarified. Changing them introduces uncertainty, rather than decreasing it.

“In the case of business interruption and COVID-19, one big challenge is the diversity of wordings in use. Of course, customised policies are very important, especially for complex risks, but in the huge majority of cases, a standard policy wording is far and away better in terms of the certainty of coverage it provides.”

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