NEW NAIC INSURANCE IQ STUDY REVEALS AMERICANS LACKING
IN CONFIDENCE, KNOWLEDGE OF INSURANCE CHOICES
indicates only 45% of Americans feel confident making insurance
decisions and 86% do not fully understand terms used in current
health care reform discussions
KANSAS CITY, Mo. (April 6, 2010) — In today’s
challenging economic environment and with questions about the
implications of the newly passed health care bill, it’s never been
more important for consumers to understand their insurance options.
Yet, according to a new survey by the National Association of
Insurance Commissioners (NAIC), only 45 percent of Americans feel
confident making insurance decisions and more than 60 percent failed
to correctly answer basic questions about insurance coverage,
- Does auto insurance cover personal property stolen from your
- At what age do most people become eligible for Medicare?
- Can credit scores affect your auto insurance premium?
The answers—no, 65 years of age and yes—eluded
the majority of the 1,000 American adults who took the survey, which
was comprised of two sections—one section gauging broader consumer
perceptions on insurance and a second 10-question IQ component that
tested specific knowledge. In fact, most respondents only answered
four out of 10 questions correctly on the IQ component. That’s an
average score of only 40 percent—a failing grade by most U.S.
educational grading standards.
Also troubling is the fact that 86 percent of respondents said
they do not understand all of the terms being used in the current
discussion on health care reform.
“Consumers today are being forced to make difficult decisions
about their insurance coverage—decisions that could have a very
profound impact on their financial future,” said NAIC Chief
Executive Officer Therese M. (Terri) Vaughan. “At the same time,
they are being overwhelmed with new and sometimes conflicting
information about changes to our nation’s health care policies. By
doing their homework and brushing up on the facts, they can improve
their Insurance IQ, which will ultimately enable them to make the
best decisions for themselves and their families.”
Other key findings related to knowledge of health care and
insurance coverage include:
- More than half (55 percent) of all Americans do not understand
what a pre-existing condition is, which is critical when selecting
health care coverage. A pre-existing condition is any health
problem that existed before someone applies for a health insurance
policy or enrolled in a new health plan.
- Forty percent do not know the age (65 years of age) at which
most people become eligible for Medicare.
- More than half of Americans (53 percent) think that they can
only make changes to their group health insurance coverage during
the open enrollment period provided by their employer, and 16
percent admit they have no idea when changes can be made. In
actuality, certain exceptions apply for new employees or employees
with life-changing events such as pregnancies or marriage.
The NAIC survey also found that some of the basics of auto
insurance are not well understood, even though it is one of most
commonly purchased types of coverage by people of all ages and
demographics. The survey found that:
- More than six in 10 Americans (63 percent) do not understand
that if property gets stolen from their car, it is covered by
their homeowners/renters policy—and not auto insurance.
- More than half (54 percent) do not realize that, depending on
the state in which you live, your credit history may be one of the
factors considered by insurance companies when determining your
premium. Other factors that can affect your auto insurance
coverage include: driving record, type of vehicle and the
deductibles you choose.
- Eighty-six percent of Americans do not know that when their
liability coverage is 100/300/100, the last figure represents the
maximum amount that their insurance company will pay in property
damage for an accident.
How to Improve Your Insurance IQ
many people rely on their insurance agent or human resources
department to help them make their insurance decisions, it’s
important that they become knowledgeable as well since they are the
ones taking on the risk. Here are some useful tips:
- Test Yourself.
Want to see how your
insurance knowledge stacks up against the rest of America? Go
to www.InsureUonline.org and
take the Insurance IQ quiz to test your knowledge.
- Get Savvy.
Before shopping for a policy,
learn as much as you can about insurance. The NAIC’s award-winning
“Insure U” consumer education Web site (www.InsureUonline.org) is
an unbiased, expert resource to help you understand the types of
insurance available, the factors that affect price and the
insurance options for your personal situation.
- Shop Around; Do Your Homework.
learning the insurance basics, get premium quotes from several
companies for the amount of coverage you require. While it is
smart to rely on personal experience and recommendations from
family and friends when making insurance decisions, it is also
important to gather information from other, more reliable sources
of information, such as your state insurance department. State
insurance regulators offer several online tools to assist
consumers with the insurance-buying process. The NAIC’s Consumer
Information Source (https://eapps.naic.org/cis)
provides fundamental facts about insurance companies, including
complaint ratios, licensing details and key financial data.
- Before Committing: Stop. Call. Confirm.
If you are unsure about an insurer or agent you are
working with 1) Stop before signing any paperwork or
writing a check; 2) Call your state insurance department
(easily reached by phone); and 3) Confirm the company or
agent is legitimate and licensed to do business in your state.
Visit http://map.naic.org to
link directly to your state insurance department’s Web site.
- Review Your Policy.
Do not wait until you
need to file a claim before evaluating the scope of your coverage.
By understanding your policies, you can be prepared for any
situation and, potentially, save money by avoiding unnecessary
About the Survey
The NAIC conducted the
Insurance IQ study March 2-12, 2010, to highlight consumer concerns
and questions; uncover misinformation and insurance myths; and
underscore the financial and emotional impact of poor decisions. The
Insurance Intelligence Quotient was based on a 10-question quiz on
different types of insurance. Participants were given a grade based
on the number of questions answered correctly. The participant
sample included a nationally representative sample of 1,000 American
adults ages 18 and older with a margin of error +/- 3.1 percent in
95 out of 100 cases.
About the NAIC
Formed in 1871, the National Association of Insurance
Commissioners (NAIC) is a voluntary organization of the chief
insurance regulatory officials of the 50 states, the District of
Columbia and five U.S. territories. The NAIC has three offices:
Executive Office, Washington, D.C.; Central Office, Kansas City,
Mo.; and Securities Valuation Office, New York City. The NAIC serves
the needs of consumers and the industry, with an overriding
objective of supporting state insurance regulators as they protect
consumers and maintain the financial stability of the insurance
marketplace. For more information, visit www.naic.org.
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