Skip to main content

Type here to search...

Understanding New Methods in Insurance 2017 You should Know

Whats new in insurance 2017 check out some new methods understanding | Over the past two years I've been working on the Insurance Council's disclosure project.
So far the key piece of work that we've been doing has been to better understand how disclosure is actually being used, and we wanted to also measure how effective it was. But just to take a step backwards, the reason we are doing all of this is that increasingly the industry is understanding that disclosure hasn't always been effective in meeting consumer needs. And increasingly we're wanting to get disclosure to a stage where it's more influential in terms of assisting people to make good decisions when it comes to insurance. So, what were the key findings of the research? There were five key findings. What really struck out at us was the gap between perception and reality.

 There was a gap between perception and reality when it came to people thinking that they had invested the amount of time that was necessary, that they'd looked at the detail of the policy before they purchased it. Because when we went and asked them what sort of information did you get, the sorts of information they were telling us they were getting, stuff like general information on websites, really don't have a lot of detail about things like exclusions and limits, things that are really important to look out for when people purchase policies. So, there was a perception between what people thought was necessary in order for them to make good decisions, and what they actually did. But also there seemed to be a gap between what people thought they understood on the one hand, and what they actually understood. Because a lot of people actually are very confident in their understanding of insurance but when we went and tested that knowledge, we gave people a test, not many people came through with flying colours. So that's a little bit concerning. So it's important for people to use online calculators, particularly for home insurance, building costs and around contents.

 Because usually when you purchase these sorts of insurance, you need to select an amount of cover, and if you don't select the correct amount or if you're left under insured, then when you need to make a claim potentially you don't get as much as you need. So most of the insurers now have an online calculator they provide to their customers, and it's really important to use it because it provides you with a more accurate estimation of the level of cover that you need. So, key tips for consumers, and the Insurance Council has a financial literacy website, it's called Understand Insurance. So if there are any kind of burning questions around general insurance concepts, go on there, it's a great resource. But start from the very beginning, what do you need to cover?

 Because in our research we found that not a lot of people actually consider that, and fair enough if you've got your renewal letter you know what you were covered for, but I think the first thing you need to do is look at what you were covered for and potentially think about whether it's actually adequate, what do you actually need to cover, what are your key risks. So for example, if you're insuring for a home building or home contents, do you have assets or contents outside of the home? If you do and you want to insure them then you need to make sure that you're covered for those. Education and literacy has a huge role to play. Our research has confirmed that the approach that we have always taken to measuring the effectiveness of disclosure is around how well do people understand their products? But what the research has told us is that a lot of people don't seem to know how to shop for insurance, so we need to go back to basics, and really need to teach people what to look out for when they're purchasing policies. Not only the need to shop around but also the need to consider what it is that they need to cover.