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’.
ADDITIONAL TRIAL INFORMATION
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.
Other: This trial was publicly pre-registered on the AEA registry, record number AEARCTR-0006236
