For insurers, understanding the decision processes of consumers buying insurance, and how those processes intersect with how actuaries and underwriters develop, price and market products, is becoming increasingly important.
It is clear that consumer purchase decision processes, not just in insurance but across the board, tend at times to seem less than logical. Final decisions will, more often than not, be based on gut instinct, rules of thumb, and aversion to loss. At times, consumers might even seem to disregard what is in their own best interests. And this is the fundamental concept behind behavioural economics: that people make financial decisions based more on emotion rather than on rational thought and analysis. RGA's Jaqui Wassenaar discusses.
- For a deeper look at this topic, please see: Behavioral Science and Insurance: Part One and Behavioral Science and Insurance: Part Two
Reprinted with permission of The Asia Insurance Review (AIR)
Contact RGA's research team to learn more about behavioral science, customer engagement and insurance.