Macro/Finance Group, NIPFP

Regulating consumer finance: Do disclosures matter? The case of life insurance

Regulating consumer finance: Do disclosures matter? The case of life insurance, Monika Halan and Renuka Sane. NIPFP Working paper 212, November 2016.

We use a sample survey based experiment to estimate the effect of simplified life insurance disclosures. We randomise survey respondents into one of four product advertisements: 1) a baseline product with no additional disclosure; 2) disclosure of the actual rate of return on the product; 3) disclosure of the rate of return and a benchmark return of a similar product; and 4) the rate of return, benchmark return and product features of a more cost-eff ective competing product. We test if these incremental disclosures affect customer views of the product, and the intention to purchase. We find that relative to the baseline treatment, only treatment 2 had an effect on product perceptions. Treatments which show additional data did not have a differential effect relative to the baseline treatment. None of the treatments had any impact on the intention to purchase.

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