Consumers' insurance literacy

evidence from survey data

Abstract

This study analyzes data from a survey developed and fielded by the author to assess consumers' insurance literacy, measured by the score on a IO-question quiz about insurance. The results show that consumers' insurance literacy is relatively low. There is significant variation in literacy by demo­ graphic characteristics, but in multivariate analysis the most significant correlates of literacy are measures of financial education and interest in personal finance. Insurance literacy is also found to be related to consumers' confidence in insurance decision-making and to the insurance information sources preferred by consumers. Consumers who prefer informal sources of information such as family and friends have significantly lower insurance literacy than others.