My blog of Sept. 29 about the need for greater simplicity insmall-business insurance policies prompted a number of intriguingreader responses, running the gamut from those who were completelysympathetic to others who were totally dismissive.

Small-business consumers queried about their customer experiencein a pair of focus groups run on behalf of Deloitte's Center forFinancial Services were nearly unanimous in their dissatisfactionwith the way their insurance policies are drafted, complaining theyappear to be “written by lawyers for lawyers.”

The blog in question (“CouldPolicies Written in Greek End Up Being Trojan Horses?”)reported that the vast majority of small-business insurance buyersin attendance couldn't make sense of what their policies said orwhat they were meant to cover, leaving them at the mercy ofinterpreters such as lawyers, agents and brokers. More than a fewsaid they suspected this lack of clarity might be intentional togive carriers an edge when a claims dispute arises.

One claims specialist posting online under the moniker“Insurance Veteran” wrote that “as a large loss adjuster who dealswith these wordings on a daily basis, I sympathize with the plightof the consumer.” He added that “we frequently see on subscriptionpolicies the different coverage interpretations proffered by theinsurers at risk. If the insurers themselves are discussing howcoverage applies to a particular loss, how does the consumer standa chance?”

This adjuster suggested that “simple-language policies wouldeliminate a lot of the players that feed at the trough created bycoverage disputes.”

An underwriter from the United Kingdom who recently retiredafter nearly five decades in the business e-mailed to say, “I couldnot agree more on the aspects you have outlined and the prominentpoints you have underlined,” adding that “it would…be so nice ifthe documents for all types of insurance were clear, non-ambiguous,and did exactly what they were supposed to do and what wasnegotiated on behalf of the client.”

According to this underwriter, while efforts have been made andare still ongoing in the United Kingdom to accomplish this laudablegoal, there is “still a lot of work to do,” particularly in themultilingual global market in which he operates. He noted that hehad to deal with coverage written in 11 languages during hisunderwriting tenure—“not that I spoke/speak them all, but throughyears of seeing the texts, I could actually understand and acceptand sign these documents.”

However, one reader with a product-development background at amajor insurance company made a strong case in an e-mail to me thatwhile policies might in fact be written by lawyers for lawyers,that's not necessarily done by insurers for a nefarious purpose—andmay not even be a bad thing when all is said and done.

“At the insurers I've worked for, the objective is to avoidunexpected expansion of coverage beyond the level that was pricedfor,” he wrote. “When a business owner sustains a loss, andit's a type of loss that doesn't lend itself to insurance treatmentor is a type that's covered by insurance the business didn't buy,then the business' legal counsel will sometimes petition a court toexpand the interpretation of one or more policies the business didbuy, perhaps to widen that policy's Insuring Agreement and/ornarrow the scope of the policy's exclusions.”

He went on to explain that “a tactic oftenused is to assert one or more of the policy's provisions areambiguous, since ambiguities in contracts of adhesion work to thebenefit of the insurance customer.” As a consequence, he added,“insurers write their policies in language that judges (morelawyers) are least likely to consider ambiguous.”

This reader also pointed out that “since what is/isn'tconsidered ambiguous varies from state to state, it's sometimesnecessary to throw in multiple safeguards to preserve the extent ofcoverage that was priced for (and thus any hope of profitabilityfor the insurer).”

The result is almost inevitable, this reader suggests: “Aftercountering creative opposing counsels' arguments (past andimagined) from 51 jurisdictions, while preserving as muchcourt-tested language as possible, the final language can becomerife with conditions and exceptions, despite the drafter's bestefforts to preserve readability.”

This reader went on to assert that in many cases, small-businessinsurance policies are “best interpreted by someone who has sometraining in legal concepts and has an understanding of case law inthe jurisdiction(s) in which a given account's coverage disputeswould likely be litigated.”

Even when using lawyers, according to this individual, “thereare gray areas where the reader may have a reasonable expectationof coverage but could be surprised by a judge's unexpectedinterpretation of a given provision. This situation is true even of'easy read' policies, whose simple-sounding language can't overcomethe effect of case-law precedents on how much coverage suchpolicies really provide.”

Indeed, dumbing-down policies might actually do more harm thangood, this reader warned. “I've sometimes felt easy-read policiesdisserve insurance customers by letting them think they totallyunderstand their coverage, unaware of what they still don't know,”he wrote.

Thus, the small-business buyer's best bet, this reader advised,is to have an expert in their corner they can trust. “I don't wantto equate insurance interpretation with medical science becausemedicine truly is more complex,” he wrote. “But just as a properlytrained radiologist can interpret an X-ray better than mostpatients can, a properly trained insurance counselor familiar witha given jurisdiction's statutory and case law can interpret aninsurance policy better than most business owners can. I'm not anagent or risk manager, but I believe this is why independent agentsand coverage consultants will always have a place in thisindustry.”

A fourth reader was a bit blunter about this sensitive subjectwhen he posted his response to my blog. “Most [policies] are easyto read,” this respondent wrote. “Perhaps it's a schooling problem.If the customers can't read, then they should hire a tutor—i.e. anindependent agent—rather than use the Internet for 'el cheapo'coverage. If the agent doesn't explain [policies] to the customer'ssatisfaction, then fire that one and interview until they find agood one.”

This reader concluded that “many agents have forgotten how toread and/or are just plain lazy.”

I certainly seemed to have hit a nerve with this blog on theclarity (or lack thereof) of small-business insurance policies andwhat (if anything) should (or could) be done about it. Thanks toall of those who have already responded on this subject—and feelfree to weigh in further with more comments to keep the dialogueflowing.