IVASS on simplicity and clarity of insurance contracts, again

On 26 February 2025 the Italian Insurance Regulatory Authority ("IVASS") published on its website the follow-up to the qualitative-quantitative analysis on the simplicity and clarity of insurance contracts carried out in 2023 (the "follow-up").

As is well known, in 2022 IVASS commissioned LPC Research to evaluate a sample of insurance contracts, consisting of stand-alone or multi-risk accident policies from different insurance companies, in order to establish their degree of simplicity, clarity and readability.

This evaluation was carried out using algorithms and readability indicators.

As part of a wider consumer protection program, IVASS decided to carry out the follow-up in question on the same basis used in 2022 in order to:

monitor progress in the drafting of insurance contracts which, in the meantime, have been revised by insurance companies; and,

defining a method for evaluating the clarity and readability of insurance contracts that can also be applied to insurance products other than those analyzed.

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Summary of the 2024 analysis

The sample taken into consideration for the follow-up also consists of stand-alone or multi-risk accident insurance policies from different insurance companies precisely in order to be able to compare the results obtained with the analysis of 2022.

The analysis was conducted on two profiles: (i) quantitative and (ii) qualitative, the results of which were then combined to provide an updated picture of the degree of clarity and comprehensibility of insurance contracts and highlight the changes made to the policies following the suggestions made during the 2022 analysis.

As regards the quantitative analysis of the sample of policies selected, it focused on the evaluation of the texts of the following clauses of insurance policies:

guarantees for permanent disability and accidental death;

the limits and exclusions of the guarantees;

the clause relating to the declarations made by the policyholder on the circumstances of the risk to be insured.

As regards the qualitative analysis, the elements of structure, customer orientation, language used and graphics of the entire insurance contracts were taken into consideration.

The result of the quantitative analysis showed evidence of a general improvement in the clarity of insurance contractual texts. However, there still seems to be a considerable presence of unusual words and excessive sentence length.

As for the qualitative analysis it is necessary to break down the results into different categories:

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Structure of the guarantees

The evaluation carried out shows that the suggestions given to insurance companies based on the first survey have produced:

a widespread revision of the contract structure according to a logic of sections/modules and headings;

a reallocation of the contents of the guarantees which has led to a widespread improvement in the comprehensibility of the scope of the guarantee;

the persistence of exclusions valid on several guarantees presented according to bulleted lists, with an often more immediate formulation;

less frequently, the invitation to propose the benefit of coverage and subsequently the other elements was accepted. There are different approaches to the revision: in some cases the company highlights the benefit immediately but does not systematize the content of the guarantee; in other cases some guarantees have been rewritten with the initial indication of the benefit, but this is not systematic throughout the contract; in other cases the benefit is indicated but there is no simplification of the language in the description of the entire warranty; and,

a general intervention on any oversights or typos.

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Graphics

According to IVASS, this is the element that has undergone the most changes, which have not always improved its readability but certainly support the usability of the policies.

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Syntax and grammar

In addition to the critical aspects found with quantitative analysis, some positive elements are:

a widespread, even if not uniform, substitution of formulas with the subjunctive with the indicative, an innovation suggested in the previous analysis carried out in 2022;

the decrease, but not the disappearance, of implicit formulas with the participle and, albeit to a lesser extent, also with the gerund; and,

the substitution, as regards verb tenses, of the future with the present.

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Vocabulary

The language used in policies is still relatively formal, therefore IVASS concludes that there is still room for improvement in this respect.

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Outcome of the 2024 analysis

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Although IVASS has noted the insurance sector's commitment, it concludes that a systematic approach to greater simplicity and clarity of all aspects of the insurance contract has not yet been achieved.

Therefore, according to the Authority, it is necessary to continue working to systematize the interventions, making them uniform throughout the contract so that the structure is functional to the presentation of the contents with the use of clear and comprehensible language.

In conclusion, the attention of insurance companies is once again drawn to the advisability of a careful evaluation of the contents of the guarantees also in terms of regulatory compliance.

The follow-up in question is available, only in Italian, at the following link: https://www.ivass.it/consumatori/azioni-tutela/indagini-tematiche/documenti/2025/follow-up-analisi-quali-quantitativa-contratti-febbraio-2025.pdf