19 January 2023
LMA releases new format of Home Insurance Policy 2023
The Lloyd’s Market Association’s (LMA) has today released a revised format of the LMA UK Home Insurance Policy (HIP) 2023. The LMA has worked alongside Browne Jacobson, utilising applied research from the University of Nottingham to ensure that the document is optimised for consumer comprehension and readability which includes a focus on more accessible language.
The overhauled policy wording, which was originally published in 2014, has employed specific drafting techniques that have been developed in conjunction with leading linguistics researchers at the University of Nottingham’s School of English, following a detailed academic study into the readability of insurance policies.
The academic study involved the use of cutting-edge research tools and analysis, including a detailed computational readability analysis, word frequency analysis using corpus linguistic techniques, comprehension testing with real customers and the use of hi-tech ‘eye-trackers’ to analyse how real readers engage with policy wordings.
In addition to linguistic techniques, the new wording also incorporates presentational techniques to help customers navigate their way around the policy wording and find the information they need quickly. Browne Jacobson and the University of Nottingham concluded that simpler home insurance policies would be easier to enforce, easier to sell and less likely to lead to regulatory difficulties for the insurer. Most existing home insurance policies require an undergraduate or even postgraduate reading ability, while 1 in 7 adults in England have a reading age of 11 or less. Media organisations regularly set their reading ages at below GSCE English level (varying between 8 for The Sun and 14 for The Guardian) and this project follows international precedent including the US NAIC Policy Simplification Law.
This project, led by Leigh Allen at the LMA, has also produced, for the first time, an “all risks” version of the HIP, published today alongside the “named perils” version. Increasingly, leading home insurers are offering comprehensive “all risks” policies to customers, providing simpler and more extensive coverage and fewer exclusions.
The LMA also worked with an external design agency, again for the first time, to develop an interactive .pdf format of the document and ensure that the visual presentation of the policy is accessible and easy to read. This work has also been undertaken in connection with the Lloyd’s commitment to producing simplified products and was overseen by the LMA’s UK Property & Household Underwriting Committee.
David Powell, LMA’s Head of Technical Underwriting said: “The LMA is proud to release this revised wording of the UK Home Insurance Policy. The final document is the culmination of Browne Jacobson and the LMA’s collaborative, thorough and meticulous revision of the policy to ensure that the new version is clearer, more concise and best aligned with the way consumers will read and understand the policy.”
Tim Johnson, Browne Jacobson Partner said: “It has been a real pleasure working with the team at the LMA to incorporate the findings of our academic study into its flagship Home Insurance Policy. We hope the new product helps market participants provide clear cover and positive outcomes to their customers”.
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Notes to Editors
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About the Lloyd’s Market Association (LMA)
The Lloyd's Market Association (LMA) exists at the very heart of Lloyd's, a world-leading global marketplace for complex risk where solutions to challenges are delivered every day. All 51 Lloyd's managing agencies, with a total market stamp capacity of approximately £48bn in 2023, and all Lloyd's members' agents, are members of the LMA.
We represent our members' interests to organisations including governments, regulators, and the market's central supporting body, the Corporation of Lloyd's. We provide professional and technical expertise in areas ranging from model policy wordings to the implementation of innovative technologies. We connect with our members to identify and resolve issues facing the market, and work in partnership with Lloyd's and the other market associations to influence initiatives and outcomes. We operate the market's most comprehensive technical education service, the LMA Academy.