In insurance coverage, LANGUAGE is a software for differentiation. Coverage language could make one insurer stand out from the subsequent. I perceive that. In reality, that’s what I attempt to do each single day – make my articles stand out (by means of my alternative of language) from the subsequent.
What I don’t perceive is the business’s insistence on utilizing completely different phrases to check with the identical factor. Too usually, insurance coverage professionals are informed (I consider by their authorized departments) to make use of particular language and toe the occasion line. How these corporations got here up with these phrases is (I consider) subjective – and that’s actually not what we want in a fancy business like insurance coverage.
The time period ‘HARD MARKET’ is an ideal instance of this.
The Worldwide Threat Administration and Insurance coverage society (IRMI) defines a tough market as: “The upswing in a market cycle, when premiums improve and capability for many forms of insurance coverage decreases. This may be brought on by a lot of elements, together with falling funding returns for insurers, will increase in frequency or severity of losses, and regulatory intervention deemed to be towards the pursuits of insurers.”
Some insurance coverage professionals are adamant that the industrial insurance coverage market has been ‘HARD’ for the previous two years. Nevertheless, some are avoiding the phrase ‘HARD’, as a substitute choosing ‘TIGHT’ and even ‘FIRM’.
What’s the distinction? Why the language differentiation? How can the business justify utilizing completely different phrases to explain the identical market? Just about all industrial insurers have felt the situations specified by the IRMI’s definition of a tough market. So, why beat across the bush? Name the market what it’s.
To fulfill my nerdy language intrigue, I made a decision to search for Collins Dictionary definitions of the three phrases ‘HARD’, ‘TIGHT’, and ‘FIRM’:
HARD (adj): One thing that’s laborious may be very tough to do or cope with.
Synonyms: tough, concerned, complicated, difficult
TIGHT (adj): Tight controls or guidelines are very strict.
Synonyms: strict, stringent, extreme, powerful
FIRM (adj): If a value, worth, or forex is agency, it’s not lowering in worth or quantity.
Synonyms: hardness, resistance, density, rigidity
What involves thoughts is the phrase: ‘Identical, identical, however completely different’. Every phrase has a special that means, however the overarching themes are ‘CHALLENGING’, ‘STRICT’, ‘COMPEX’, and ‘RIGID’, that are additionally phrases used to explain the industrial insurance coverage market lately.
To complicate issues, some corporations choose to not use any of the above phrases, and so they choose to make use of the time period ‘TRANSITIONING MARKET’ – referring to the corrective actions and adjustments the market is making in response to the situations described within the IRMI’s definition of a tough market.
I’ve a novel perception into this linguistic battleground. I interview all kinds of corporations within the business, from insurers to brokers and businesses, MGA/MGUs, reinsurers, insurtechs, legislation corporations, and consultancies – and so they all have their ‘most well-liked’ phrases, which I then must relay (particularly when quoting). However once more, these are completely different phrases for a similar factor.
The newest phrase dispute I’ve observed revolves across the altering market situations. By way of 2022, the industrial insurance coverage market has improved throughout many strains (with just a few exceptions, like cyber insurance coverage). To explain this, some insurers are utilizing the phrase ‘MODERATING’, whereas others are utilizing ‘STABILIZING’. Once more, not numerous distinction there.
Why can’t the insurers simply choose one time period and roll with it? I’m certain that extra readability and consistency would go down nicely with brokers and brokers – who’re at present having to demystify insurers’ language with purchasers. Additionally, I feel it’s a protected wager that purchasers don’t care should you use ‘HARD’, ‘TIGHT’ or ‘FIRM’. They simply wish to perceive why their premiums have gone up or why their protection has modified – and so they need that clarification in plain, easy language.
In attempting to distinguish themselves by means of phrases, insurers are (maybe inadvertently) additional complicating this already complicated business. Get actual everybody. Whether or not you say ‘TOMAYTO’ or ‘TOMAHTO’ – it’s nonetheless merely TOMATO.