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The broker’s role in providing expert guidance is now more important than ever, as a recent study found that many consumers are bamboozled by choice when it comes to selecting an insurance policy despite the availability of all the relevant information.
A survey by online media publisher The Conversation asked 406 Australians to choose from three home-contents policy choices, good, okay, and bad, and provided them with the legally required product disclosure statement (PDS) and/or a mandatory two-page key factsheet outlining policy coverage and exclusions.
The results showed a massive 76.2% of participants making the best choice after receiving only the short-form information, while 9.5% picked the bad policy and another 14% couldn’t choose at all. But when the number of product choices increased, the participants who picked the good policy declined to less than half.
Adam Sulway, Gallagher manager of corporate, said that for most people, the devil is in the detail: policy wordings.
“Insurance products are largely homogeneous for their respective categories,” Sulway said. “For example, home-and-contents insurance offered by the major domestic insurers provide similar cover across 80% to 90% of their respective product. However, it’s the 10% to 20% difference in cover that can catch consumers out and be problematic when a claim occurs.”
The small percentage represents the gap between what consumers think they are covered for and what they are actually covered for, without necessarily having read or understood the policy wordings, Sulway said.
“This is where talking to a broker can pay dividends,” the brokerage giant said. “Professional guidance from an expert who understands policy wordings, and what they do and don’t cover, contributes enormously to a positive outcome at claim time. In most cases, a conversation with a broker will clear up grey areas and ensure policy cover expectations are clear and understood between the consumer and the insurer.”
