We live in a complex world

Complexity in Insurance Contracts

by Dandolo Flumini @ Mitra-Solutions AG

Terms and conditions of insurance products are of Byzantine complexity, and it's all over the internet.

CHOICE, the Australian consumer organization notes that despite several attempts at fixing the issue,

.., the fine print continues to defy comprehension. see here

Travelweekly deems

Trip insurance terms too complex to comprehend.. see here

also, the Financial Times notes that

The head of one of the world's biggest life assurers has admitted his industry suffers from a credibility problem because it has sold over-complex products to savers.. see here

Of course, this list can be extended almost indefinitely.

The Price of Complexity

Unfortunately, complexity is not just a minor inconvenience but a significant driver of costs, inefficiencies and customer dissatisfaction in personal line insurance. To get an overview, we briefly organize the pain points regarding the affected actors, the customer, and the companies respectively.

The Customers Perspective

The customers are the apparent victims of overly complex insurance policies; they either have to put in the effort to cut the Gordian knot or otherwise blindly buy into products they don't understand. In particular, customers struggle with:

The Insurers Perspective

While the complexity diminishes customer experience, the insurance companies suffer no less. Complexity in their products is one of the main cost drivers in operations, and it is a significant problem for digitization and automation:

Simplifying is not Simple

Why not just try and get rid of complexity as much as possible? Some companies indeed work towards simplified or even “radically simplified” policies. Lemonade, for instance, has simplicity and transparency as an integral part of its philosophy. However, simplifying insurance products is no easy task. Given that every product needs to create a balance between “looking good on paper” with regard to coverage and price, and at the same time achieve a favorable loss-ratio, some degree of complexity, in the right places, is required. Thus, lowering complexity in the wrong places, and thereby limiting one's possibilities to fine-tune crucial parts of a product, will inevitably result in dysfunctional policies. Hence, “blind simplification” can be a severe impairment to product development.


Given that getting rid of complexity is possible only to a certain degree and is not an easy task at all, intelligent tools should be used to deal with it. We at Mitra believe that such tools should

The Role of Mitra

Creating such tools is what we do at Mitra; we have built a framework tailored to implement digital insurance contracts and GICs from scratch and without any restrictions. Our framework includes a user-friendly environment that allows digitalized development to be steered from the business (instead of the IT department). The main features and benefits of our system are as follows:

If you are interested in knowing more about how our system works, don't hesitate and contact mitra@mitra-solutions.com.