Life Insurance

Behavioral Economics Show Details Matter

In comparison, the standardized questions used as the control group were open-ended and asked individuals whether or not they had ever been diagnosed, treated, tested positive for or been given advice with a person in the medical profession for a specific medical condition (for instance, “Any cancer, tumor, cyst or nodule” for cancer-related conditions). This may need a level of medical knowledge beyond what can reasonably be expected of someone who isn't a medical professional and can create some uncertainty or difficulty in recollection for individuals completing the application.

In addition, although the five-point-scale questions were one of the longest when it comes to respondent time to accomplish — averaging almost eight minutes – condition disclosure increased by four to eight times over the standardized (control) questions.

The standardized question format was the shortest for respondents to accomplish, averaging just 2.34 minutes, yet it was found to become the least effective question design when it comes to increasing medical condition disclosure.

By implementing a new design framework, insurance carriers can improve not only the clarity of the application questions but also the level of knowledge that is disclosed by applicants. While companies have much to consider when making changes to their applications, the outcomes of Gen Re's BE experiments show that small changes can have a big impact.

In addition to our leading behavioral economics research, Gen Re also conducts numerous studies that benefit the U.S. Group and Individual Life/Health insurance industry. Our wide number of industry studies, and our MarketChecks on key topics of interest, keep us at the forefront of insurance research.

If you are looking at learning more about our research capabilities, contact me.

You can find the article originally published here.

Reprinted with permission from Gen Re. (c)2019 General Re Life Corporation

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