Jargon: sep 2020 exam

[Sankar Krishna]

Sep 2020 exam requires us to communicate regarding proposed changes to telemarketing script and its impact on profitability.

Terms such as loss ratio and lapse rate are considered jargon given that audience is sales professional.

My doubt: I used these terms in my answer but clearly explaining what it means.
When a policyholder buys an insurance product but stops paying premiums, the policy lapses. The ratio of lapsed policy to total number of policies is lapse ratio.

Loss ratio is ratio of claims paid out to premiums earned.

I thought these two terms necessary as profitability is impacted due to change in lapse rate and loss ratio.

Will I be penalized for use of jargon, even though I have explained what it means clearly?

In the examiners report, they have used terms such as "policy in force", "claims experience" which are given as jargons in examiners report of previous diets. Sales professional will not know what is claims experience and policies in force but how is it that these terms are included?

 

[Helen Evans]

Hi Sankar

Thank you for your message. We have a decision to make in the exam as to whether to introduce terminology and immediately explain what it means in a clear way (so that it is then no longer jargon as you suggest) or whether to side step it, ie avoid using the terminology. If you can find an easy way to describe an issue without bringing in the technical term then this is often the best way of dealing with it. However, sometimes it is a good idea to bring the term in and immediately explain it in a way that will be understood by the audience. This is particularly the case for terms which are difficult to set out quickly in another way and where we will need to keep coming back to the concept several times in our answer and it might end up rather long-winded and repetitive if we constantly tried to talk around the issue.

The examiners may allow some flexibility, ie it may be acceptable for some terms to either be avoided, or brought in and clearly defined. Remember the exam report is just setting out one acceptable solution, other solutions can equally be a pass.

What I would say about your particular definitions here are:
- in your opening sentence of describing lapse rate I would be inclined to just say a little more to make clear what we mean by a lapse. Along the lines of '... but stops paying premiums then the policy is cancelled, we say that it lapses'.
- in the definition of loss ratio I do not think our audience can be expected to know what 'premium earned' means. We do need to be careful when explaining a technical issue that we don't end up bringing further technical issues in as we 'unpack' the term.

I have to say that I thought policy in force and certainly claims experience are likely to be okay for this audience, although if we felt uncomfortable about policy in force perhaps 'current business' might work as a simpler alternative. What is considered jargon will vary from one paper to another dependent upon the understanding of the particular audience.

I hope this helps and your studies are going well.

Helen

 

[Sankar Krishna]

This helps a lot. Thank You!