Insurance Literacy in Australia: Not Knowing the Value of Personal Insurance

Insurance Literacy in Australia: Not knowing the value of personal insurance, Financial Planning Research Journal, 4(1): 53–75 (2018)

Griffith University Law School Research Paper

24 Pages Posted: 22 Feb 2018 Last revised: 15 May 2018

See all articles by Tania Driver

Tania Driver

Griffith University - Griffith Business School

Mark Brimble

Griffith University - School of Accounting, Banking and Finance - Nathan and Logan Campuses; Centre for Financial Independence and Education

Brett Freudenberg

Griffith University - Griffith Business School; Griffith University - Griffith Law School

Katherine Helen Mary Hunt

Griffith University

Date Written: February 12, 2018

Abstract

Underinsurance and low financial literacy have been shown to be key issues impacting the effectiveness of personal financial management. Both issues are made more important by the complex financial system, an ever moving array of financial products and services, and the progressive move towards self-reliance in retirement. These factors suggest a greater degree of financial independence and more effective financial decision making is required over the long-term, both of which may be undermined by low financial literacy and underinsurance. Little is known however, about the impact of financial illiteracy on the propensity to seek and retain insurance.

Using an interview methodology, we obtained the view of informed and non-informed participants to examine insurance literacy in Australia. We find evidence that insurance literacy of consumers is generally low and exacerbated by factors such as low product knowledge, low trust of providers, low awareness of risk mitigation strategies, and behavioural decision-making biases. These factors can culminate in a perception of low value and subsequent underinsurance.

Furthermore this appears to be more acute for personal insurances as opposed to general insurances.

Keywords: insurance, financial planning, financial literacy

JEL Classification: H31, D14, D70, G02

Suggested Citation

Driver, Tania and Brimble, Mark and Freudenberg, Brett and Hunt, Katherine Helen Mary, Insurance Literacy in Australia: Not Knowing the Value of Personal Insurance (February 12, 2018). Insurance Literacy in Australia: Not knowing the value of personal insurance, Financial Planning Research Journal, 4(1): 53–75 (2018); Griffith University Law School Research Paper. Available at SSRN: https://ssrn.com/abstract=3122189

Tania Driver

Griffith University - Griffith Business School ( email )

Brisbane, Queensland 4111
Australia

Mark Brimble

Griffith University - School of Accounting, Banking and Finance - Nathan and Logan Campuses ( email )

University Drive
Logan, Queensland 4131
Australia
(07) 373 55311 (Phone)

Centre for Financial Independence and Education ( email )

Brisbane, Queensland 4111
Australia

Brett Freudenberg (Contact Author)

Griffith University - Griffith Business School ( email )

Brisbane, Queensland 4111
Australia

Griffith University - Griffith Law School ( email )

Nathan Campus, GU
Nathan 4111
Australia

Katherine Helen Mary Hunt

Griffith University ( email )

170 Kessels Road
Nathan, Queensland QLD 4111
Australia

HOME PAGE: http://app.griffith.edu.au/phonebook/phone-details.php?type=B&id=1665253

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
150
Abstract Views
561
rank
209,745
PlumX Metrics