Speaking Candidly About Candor

Candor means communicating information to another when custom or self-interest might suggest silence. In the law, candor surfaces as an implied obligation of fiduciary relationships which requires a superlative degree of candor. A fiduciary duty is essentially the highest duty the law recognizes. In the law, candor is the touchstone of any fiduciary relationship.

As an attorney, I have represented or spoken to thousands of agents, underwriters and claims personnel across the continent. I believe insurers and agents are largely unaware of the absence of candor in their communication and relationships. I see an industrywide absence of candor in the process of quoting and binding, in certificates and binders, in policy forms, claim denial letters, and correspondence among insurance professionals. Ultimately, this lack of candor is visited upon the insured in the form of hard-to-read policies, strange exclusions, vague quotes and obtuse language. The absence of candor seems institutional, normative and entrenched in our culture.

This lack of candor is manifest in policy forms. One cannot tell what is covered, say judges and juries, because the sentences are hard to parse. It seems like our industry's obtuseness is programmed into the operating system on the hard drive. Ponderous language surfaces like crabgrass with such frequency that it goes unquestioned. Nobody else writes like insurers.

Consider the big picture. Poor writing, whether purposefully vague, or simply imprecise, or unintelligible, is just another way of perpetuating the absence of candor. We fail to communicate candidly to the public. There is no preamble or user's manual in a policy. We don't explain the purpose of insurance to the consumer. We do not explain that deductibles and exclusions provide a way to lower premium and represent a trade-off between protection, affordable rates and the desire to cover profitably the major risks the insured may face. We do not explain why the policy language is cryptic or written with double negatives or awkward sentence fragments.

How many different opinions are there on loss triggers, pollution exclusions, occurrence, or the meaning of "advertising injury" coverage in the forms?

Our language is the most obvious example of our institutionalized candorlessness. If it takes an extra two pages to explain a concept in the policy, we should do it. Until the industry begins to write and speak with down-to-earth clarity and openness, distrust will remain.

The Marsh investigation tells us of the need for candor in the process of creating and submitting proposals. Wholesale brokers and managing general agents need to communicate candidly with retailers during quoting. Retailers, in turn, need to be candid with the wholesalers and their policyholders. Carriers need to explain voluntarily policy changes to the agents who sell the coverage so the agents, and, in turn, the insureds, are not misled or confused.

We need to change policy language before a court decision compels that result. We need to disclose the underwriting intent to our customers and agents. We need to work hard to eliminate the temporal gap between the stated language and the underwriting intent. If vagueness and ambiguity are always interpreted in favor of the policyholder, then why promote ambiguity?

Has the industry considered hiring some smart graduate students in English to re-write form language while they are on summer break? Engineering firms routinely use technical writers to convey complicated concepts in manuals or instructions. Why haven't carriers learned that lesson? We need to emphasize the writing in good underwriting.

The industry should consider the possibility that candor is not something to provide begrudgingly, but one of a handful of core values that, when embraced, may lead to improving a troubled industry. We know from our personal experience that candor is most valuable when it is least expected, not legally compelled. Candor permits a carrier to distinguish itself from the candorless, colorless competition. Candor is a powerful thing.

In politics and foreign policy, candor can allow people to reach across economic and cultural divides, forge loyalties and turn around unpleasant situations. Candor in personal and business relationships creates trust, and that trust builds equity in relationships that can be mortgaged for forgiveness when, inevitably, mistakes are made. Candor along with humor and aesthetics are necessary elements of the Human Voice that the insurance industry needs to embrace.

The next time you read about a lawsuit or malady affecting the insurance industry, consider whether the root of that controversy flows from the absence of candor.