BETA and ASIC partnered to design and test information statements to help support consumer decision-making about add-on insurance.
We designed an information statement to remind people add-on insurance is not compulsory, highlight the (usually poor) value-for-money of add-on insurance, and prompt people to consider shopping around for a better deal.
We tested our designs with over 6,000 Australians. Participants took part in a simulated shopping scenario, and were then offered add-on insurance. Some participants saw our information statement, others did not. We found an information statement led to a 9 percentage point decrease in hypothetical add-on insurance purchases (a 24% reduction).
The information statement appeared to help slow down the decision to buy add-on insurance, and the findings suggest that as a defence against the pitfalls of add-on insurance, a well-designed information statement may help create space for consumers to say ‘no’.
Intervention start and end date
29 July 2020 to 12 August 2020
Ethics approval
BETA Committee of Peers, July 2020
Experimental design including randomisation
This trial used a seven-arm between-subjects online ‘shopping scenario’. Participants were randomly assigned to one of six intervention conditions (described below), or a no-information control condition.
Intervention(s)
The intervention was an information statement informing participants that add-on insurance is not compulsory, highlighting the (usually poor) value-for-money of add-on insurance, and prompting people to consider shopping around for a better deal. There were six different versions of the information statement, created by varying two factors in a factorial design. The first factor was the colour (red or blue) of the information statement. The second factor was information about the ‘claims ratio’, a key piece of information about the expected value of the add-on insurance to consumers. The claims ratio displayed on the information statement was either relatively high, relatively low, or absent.
Control condition
No information statement.
Outcome(s)
The primary outcome measure was respondents’ decision to ‘buy’ or ‘not buy’ add-on insurance in an online hypothetical shopping scenario. The secondary outcome measure was respondents’ decision to ‘opt out’ (or not) from further sales from the provider.
Sample size
Expected sample size, 6,300; final sample size was 6,243.