Insurance in general uses complicated language that is difficult to comprehend, according to a Risk and Insurance lecturer at the National University of Science and Technology lecturer, Smarntha Shoniwa. As a result, some people have trouble accessing cover, encounter administrative hassles and face other hurdles in claims processing.
Many consumers who buy insurance do not understand the plans they buy hence the number of unnecessary reports and complains to the Insurance and Pensions Commission (Ipec) said the Ipec’s Head of Prudental Affairs Pupurai Tograperepi at an insurance journalist training workshop earlier this year.
“A person buys third party insurance goes around boasting that I have an insurance policy and when an accident happens the guy is not informed what that policy can do. You just have a big bar talk that when you have insurance policy when your Mercedes Benz is destroyed one will be replaced. But the guy is a third party. If information is not correctly delivered to this person you will see complains coming to Ipec that insurance company so and so doesn’t want to pay. And if you look at the policy the policy can’t do that it’s very critical that insurance companies make a serious effort to ensure that our people know what is covered,” Togarepi said.
All this could be avoided by writing policies that are simple to understand in vernacular language, said Zimselector.com Business Development Manager Zelina Francis.
“If people are going to buy insurance, they have to understand what they’re buying,” she said, and that goes beyond insurance jargon. “It’s so much more than just the language on a page; you have to understand the language and it’s much easier if it is written in vernacular,” she added.
Many people struggle to understand basic insurance terms like “premium,” “deductible” and “copay” and become more confused when they hear terms like “endowment” and “annuity”.
Insurance policies should be written in a language people understand, says Zelina Francis.
Some insurers in Zimbabwe have acknowledged that insurance is complex area and are already taking steps to make insurance plans easier to understand.
“At Old Mutual we have already started to explain our products and interact with some of our clients in local languages,” said Old Mutual Life General Manager Rueben Java.
Some insurance companies like Minerva have even gone a step further and have product brochures of some of their products in vernacular languages.
Zimbabwe has a very low penetration rate of 1.5%, many companies have been trying to introduce micro insurance products to attract low income earners. However most of these products have not been a success due to language barriers in terminology of the policies and wording.
Most of the low income players do not understand insurance making it difficult for them to enroll in private or individual insurance plans. Language thus becomes a major barrier in the uptake of individual insurance plans.
Insurance companies have made concerted efforts to help consumers understand insurance plans through the numerous radio programs and awareness programs, but it is challenging for the members of the public to understand.
“Insurance plans and policies written in vernacular languages can break these complexities down. And introducing insurance in primary and secondary education curriculum can help in demystifying insurance,” said a senior lecturer in the Department of Commerce at the Zimbabwe Open University Kudakwashe Sithole.
“There is a huge perception amongst insurance companies, that people know what they’re talking about, and that’s a huge misconception,” he added.
Ipec recently launched the Micro Insurance Framework to regulate the micro insurance industry in Zimbabwe, it should if possible enact a law that makes it mandatory for insurance companies to have policies in vernacular languages. Not only to promote a better understanding of insurance policies but to also protect people from mis-selling of insurance products by agents and insurance companies.