Do Disclosures Matter? The Case of Life Insurance

Abstract

We evaluate the effectiveness of disclosures in the context of the insurance market in India. We present product advertisements to customers with three differing sets of disclosures: the actual rate of return on the product, a benchmark return of a similar product, and product features of a more cost-effective competing product. We test if the disclosure of this information makes an impact on customer views of the product, and purchase decision. We find the treatment which disclosed the rate of return on the insurance product, were 2.6 percentage points less likely to think that the product on offer was a “good” product. Treatments which show additional data such as a comparison rate of return, or the price of a term insurance plan were not statistically significant from Treatment 1, which made none of these disclosures. We think that when respondents are given more than one piece of information, they seem to lose focus. Our results also suggest that transparency policies are effective only when the information they produce becomes ”embedded” in the everyday decision-making routines of the users.

Keywords: disclosures; life insurancel India

JEL Classification: D14, D18, G22