MFSA research identifies gaps in consumer understanding on home insurance

New research on consumer attitudes and behaviour shows that home insurance is mainly tied to bank loan requirements for a majority of Maltese, with 44 per cent buying their home insurance directly from the bank when taking out the loan.

The report, published by the Malta Financial Services Authority (MFSA) on Tuesday, is the result of telephone interviews and online surveys with 700 respondents, and will guide the MFSA’s work in the field of home insurance.

The research sought to gain an insight into consumer understanding of the identity of their home insurer and of the insurance cover they currently have.

The results show that 24 per cent of respondents have never bought a home insurance policy while 6 per cent are unsure if they have.

Respondents who took out a loan to purchase a home reached 60 per cent, with 44 per cent also purchasing their home insurance policy through the bank that offered the loan.

However, most seem content with the situation, with almost 70 per cent planning on maintaining the policy after the loan is fully repaid.

The sum insured for Buildings is also mainly connected to the bank loan requirement, with over 50 per cent of respondents insuring their buildings for the sum stipulated by their bank.

On the other hand, for their Contents sum insured, over 50 per cent of the respondents opted to choose a more accurate sum so that their claims could be paid in full, although 54 per cent have never updated their sums insured. The tendency not to update the sums insured is higher in younger respondents.

Consumer knowledge of the identity of their home insurer was mixed. Although 70 per cent stated the name of an insurance undertaking when asked who the provider of their home insurance policy was, 12 per cent did not know who it was while 18 per cent stated the name of an insurance intermediary.

The research found that consumer knowledge of what is included as standard cover for Buildings and Contents is poor, with 28 per cent including freezer contents during a power outage as items covered and 42 per cent saying wedding rings are covered, neither of which is typically the case.

Around 70 per cent of respondents who purchased a home insurance policy never actually made a claim, but those who did were generally satisfied, with an average score of 3.96 on a scale from 1 (not satisfied at all) to 5 (very satisfied).