Suncorp is planning to launch a “gamified video” to help tackle the widely recognised failure of insurance disclosure.

This week’s parliamentary hearings scrutinising insurance heard that disclosure remains “a significant issue, with customers routinely failing to read product disclosure statements and lacking understanding of what policies cover.

Suncorp CEO Insurance Gary Dransfield told MPs home insurance is the most problematic area, and an unnamed Suncorp brand is working on “a gamified video explanation” of the broad elements of cover.

“I think, generally, the industry agrees that disclosure isn't working,” Mr Dransfield said.

“We’re very committed to trying to lift the level of understanding of our customers and not just be anchored to a very long product disclosure statement.

“We think the more visual, gamified mechanisms may help people to understand the really key elements.”

insuranceNEWS.com.au asked Suncorp for further details of the project, including how it will work and when it will be launched, but the insurer declined to comment.

Gamification, according to the dictionary definition, involves applying to other areas typical elements of game-playing, such as point-scoring or competition with others, to encourage engagement.

The Australian Financial Complaints Authority (AFCA) told the hearings that disclosure is “a significant issue in insurance”.

CEO and Chief Ombudsman David Locke told MPs the current process places the obligation of disclosure on the consumer.

“That means the consumer must disclose information and must read all the product disclosure statements,” he said. “The reality, of course, is that, for many individual consumers, they do not do so.

“The evidence of the regulator, as well as our experience, is that many people purchase insurance based upon price and advertising, not actually clauses that may be 40 or 80 pages into a document and that they may not be able to readily understand.

“The result is that often people do not genuinely know what they are covered for until a claim is lodged.”

Noting that more work could be done to provide greater clarity in wording, Mr Locke added: “We believe the more that standard definitions can be used across industry and the more that there can be minimum levels of cover, the less potential there is for misunderstanding, confusion and ambiguity, which often lead to complaints.”

An Australian Securities and Investments Commission report released in October confirmed the regulator is looking to move away from “an over-reliance on disclosure” in favour of its new product intervention power.

In March last year the Insurance Council of Australia (ICA) launched a nine-point action plan to improve the disclosure regime, building on its Effective Disclosure Taskforce’s 2015 report Too Long: Didn’t Read.

“ICA and its members have long recognised that consumers are not well served by the existing disclosure regime,” spokesman Campbell Fuller told insuranceNEWS.com.au today.

He says ICA has been working on a series of initiatives “to help member companies improve disclosure while also continuing to meet onerous legal requirements”.

“The ICA’s work on these initiatives will resume following the COVID-19 pandemic and more certainty about the impact that post-Hayne legislation will have on customers and insurers,” he said.

“Discussions at the House of Representatives Economics Committee hearings and submissions to the natural disasters royal commission suggest some consumer organisations and MPs recognise the flaws in the current regime and appear willing to work with the industry on disclosure-related initiatives.”