“If It’s Easy to Read, It’s Easy to Claim”—The Effect of the Readability of Insurance Contracts on Consumer Expectations and Conflict Behaviour

Abstract

In the area of financial services, lawmakers and regulators increasingly promote theuse of plain language in business-to-consumer contracts. Although such efforts are undoubtedlywelcomed by consumers, as they promote better comprehension, not much is knownabout the actual effects of improved readability on consumer attitudes and cognitive processes.Does improved readability in general contract terms have an impact on the consumer’sperception of their contractual position? Do contracts that are easier to read influence the stepsor actions taken by consumers in the wake of conflict? In response to these questions, wepresent data from an experiment that investigates the relationship between the reading ease ofgeneral contract terms on the one hand and consumer expectations and willingness to engagein conflict on the other. Our findings suggest that readability increases the trust and confidenceof the consumer in the sense that it increases their expectations of the claim. Moreover, wehave found partial evidence to suggest that reading ease also increases the consumer’swillingness to engage in legal action in the case of subsequent claim denial.