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Disclosure documents don't help people choose better insurance: ground-breaking research finds

Press release September 16, 2018 Insurance Research Fund

Government mandated insurance disclosure doesn’t help people make purchasing decisions.

This was the key finding of a world first experimental study released today titled (In)effective Disclosure: An experimental study of consumers purchasing home contents insurance. The study, conducted by Monash Professors Justin Malbon (Faculty of Law) and Harmen Oppewal (Monash Business School) examined the effectiveness of home contents product disclosure statements (PDSs) and key fact sheets (KFSs) in assisting consumers to select the best policy that suits their needs.

406 participants across Australia were provided a PDS and/or a KFS and were invited to purchase a home contents insurance policy from a choice of a ‘good’, ‘okay’ and/or ‘bad’ insurance policy.

The study found that:

  • up to 42% of participants chose the worst offer, despite being given the time and opportunity to review the disclosure information
  • when able to choose from three policies, 35% chose the worse policy and only 46% found and selected the best policy;
  • there was no simple and consistent effect of disclosure - while participants were more likely to forego purchasing an insurance policy when they had only access to the PDS the results did not find a clear pattern of understanding where people were provided more or less disclosure information
  • purchasing decisions were not affected by the way in which the consumer viewed the disclosure (i.e. computer or smart phone)

“In these circumstances the question needs to be asked whether disclosure is an effective tool at all to aid consumers in choosing an insurance policy,” said Professor Oppewal. “Mandated disclosure may serve other purposes, including informing the purchase choices of highly literate and motivated consumers, guiding consumers through the claims process or ensuring they have a clear guide as to the limits of their policy when there is a dispute, but the findings indicate that even in ideal circumstances, disclosure does not ensure that consumers make better decisions nor does it help their chances of obtaining suitable insurance cover.”

“There is clearly considerable room for improvement in mandated insurance disclosure documents,” said Professor Malbon, “but when people keep making the wrong decision even in the most ideal of circumstances (and with starker differences in policy coverage than usually exists), you have to wonder if there is a better way.”

“When you look at the fact that sectors like the shipping industry have simplified their own insurances down to a choice between three standard term policies for cargo insurance:– and these people live and breathe insurance risks – it is hard to understand why we expect everyday consumers to figure it all out. It may be time for a serious rethink on disclosure practices. We should consider requiring insurers to offer a standard set of gold, silver and bronze cover across the industry. That way the market can compete on price, and not confound consumers about what is covered and not covered when they make claims under their policy. The government has standardised the terminology for flood cover, it should go further and standardise all terms such as for robbery, fire, earthquakes and so on.’

“Our experience with speaking to consumers on our Insurance Law Service phone line is that people are regularly unaware of what insurance they have purchased, confused about what is covered, and unable to understand their documents when they do in fact read them,” said Karen Cox, Coordinator of the Financial Rights Legal Centre.

“With Treasury about to release its review into the product disclosure regime and standard cover, Professors Malbon and Oppewal’s study is a timely account of the failure of mandated disclosure to assist people in buying insurance products that suit their needs.”

“The Government and the insurance sector need to take a close look at the results of this study. If the policy goal is for people to be purchasing insurance that best suits their needs, this research confirms that further efforts to improve disclosure are misplaced. Instead, policy makers should look to minimum standards for policies, or star rating systems that people actually understand.”


The full report, (In)effective Disclosure: An experimental study of consumers purchasing home contents insurance can be accessed at

The study was supported with funding from the Financial Rights Legal Centre a community legal centre that specialises in helping consumers understand and enforce their financial rights, especially low income and otherwise marginalised or vulnerable consumers. This funding was in turn sourced from over-collected fire services levies distributed in accordance with a process set up by the Victorian fire services levy monitor for projects benefitting Victorian consumers of insurance.


For further information contact Helen Westerman.[email protected], Monash University or Drew MacRae, Policy and Advocacy Officer, Financial Rights Legal Centre, [email protected] 02 8204 1386

About Professor Justin Malbon

Professor Malbon is a professor at the Faculty of Law at Monash University. He is a previous Dean of the Griffith University Law School and Director of the Credit and Consumer Law Research Program. He has formerly held the positions of Principal Assistant Parliamentary Counsel, Queensland Office of Parliamentary Counsel; Assistant Divisional Head (Legislation) Division of Aboriginal and Islander Affairs; Research Manager, Blake Dawson Waldron, Melbourne Office (now Ashurst); and Senior tutor at the Law School, University of Melbourne. He also practiced as a Barrister and Solicitor in South Australia for a number of years.

About Professor Harmen Oppewal

Professor Harmen Oppewal is the Head of the Department of Marketing in the Monash Business School at Monash University. He teaches consumer behaviour and research methods. His research focuses on consumer decision-making behaviour in retail and related services contexts, often using experimental and/or modelling methods. He has conducted numerous studies in marketing and retail, housing and real estate, recreation and tourism, and transportation, many of which were published in premier journals in these disciplines. His projects are either academic or for business and public policy clients. For further details see

About Financial Rights

The Financial Rights Legal Centre is a community legal centre that specialises in helping consumer's understand and enforce their financial rights, especially low income and otherwise marginalised or vulnerable consumers. We provide free and independent financial counselling, legal advice and representation to individuals about a broad range of financial issues. We operate the Insurance Law Service which provides advice nationally to consumers about insurance claims and debts to insurance companies. Financial Rights also operates the Credit & Debt Hotline, which helps NSW consumers experiencing financial difficulties. Financial Rights took over 25,000 calls for advice or assistance during the 2017/2018 financial year.

·       National Debt Helpline 1800 007 007

·       Insurance Law Service 1300 663 464

·       Mob Strong Debt Help 1800 808 488


Insurance Research Fund