Insurance industry urged to keep it simple when writing policies

By Cindy Brovsky
THE COLORADO STATESMAN

Colorado insurance policy holders who have trouble muddling through complicated language may get relief.

The “Use of Plain Language in Insurance Policies” bill will cut down on confusion by policyholders and help the caseload of the Colorado Division of Insurance, said sponsor Rep. John Kefalas.

The division receives about 25,000 inquiries annually and a significant majority comes from policy owners who have trouble with the wording of their policies, Kefalas said. The Fort Collins Democrat decided to sponsor the bill after researching health care reform and learning the division was seeking such a bill.

“Many of the phone calls and emails to the Division of Insurance start out with, ‘I don’t understand my insurance policy,’” Kefalas said. “I see this as consumer protection.”

Current Colorado law does not require any readability level in automobile, health, dental plans and long-term plans. Kefalas’ bill would require policies issued or renewed after July 1 be written at or below 10th grade reading level. The bill also requires the text of the policies be written in 12-point or larger and contain an index or table of contents if longer than three pages or 3,000 words.

Other states require certain reading levels in the policies. The grade level is measured by the Flesch-Kincaid Grade Level Formula and Flesch Reading Ease Formula, which are designed to indicate comprehension difficulty. Rudolf Flesch was an author, readability expert, writing consultant and an early proponent of plain English in the United States.

Kefalas said he is not “dumbing down” the policies but using language that is more understandable for the general public. For example, on average newspapers write at an 8th grade reading level to reach the most readers.

The Colorado Group Insurance Association, a non-profit organization within the health care industry, opposes the bill. The association’s board recently met on the issue and said requiring 10th grade language undermines settled law.

“Many insurance terms have been defined over the years through litigation,” the association said in a written statement. “When a certain phrase or word is used in a policy, attorneys, judges and insurance professionals understand the intent of the policies and the protections it affords. Replacing well-known language with less specific terms exposes consumers and insurers to fraud or lawsuits.”

The association also said rewriting polices and requiring a 12-point font will increase costs, which will be passed on to the consumers.

Kefalas said he is willing to work with the insurance industry to reach a middle ground concerning the reading level of the policies. However, he said the goal of the bill is to cut through the “legalize” and “gobbledygook” that often create long, complicated sentences. He cited one example of a policy that was written at a graduate school reading level and was incomprehensible for the general public.

“We’re not trying to take out the legal language but the sentence structure can be shorter and the language plain,” Kefalas said. “It can go a long way to keep the consumers informed.”

The Division of Insurance can enforce the new plain language and reading levels because insurance companies must submit policies for review each year, he said.

Cindy@coloradostatesman.com