The study shows that these environments often contain several elements that may encourage consumers to make quick decisions and steer them towards taking out insurance. Many platforms also use additional behavioral triggers, such as an emphasis on security and protection, social proof, and time pressure during the purchase process.
The AFM also finds that information is generally presented in layers, with the top layer emphasising the benefits, while important information about limitations, duration, costs and possible overlap with existing insurance policies is less visible or harder to find. This may result in consumers making choices based on an incomplete and on-sided picture.
The AFM notes that the coverage of embedded insurance may overlap with a consumer’s existing insurance policies. The steering in online choice environments takes little or no account of this risk of overinsurance, increasing the likelihood that consumers end up with insurance that is not appropriate for their situation.
While the AFM did not examine possible violations of regulatory requirements in this study, it emphasises that the design of the online choice environment may result in suppliers and/or platforms failing to comply with regulatory requirements which the AFM is empowered to enforce. The AFM calls upon suppliers and platforms to design their online choice environments carefully, so that consumers are better supported in making choices that are appropriate for their situation.
The full news update is available here.