This article explores the influence of behavioral economics on the insurance market, focusing on the key effects of loss aversion, anchoring, and hyperbolic discounting. These cognitive biases significantly affect consumer behavior and decision-making processes, leading to suboptimal insurance purchasing decisions. Loss aversion causes consumers to avoid potential losses, often underestimating the value of long-term coverage. The anchoring effect distorts choices by causing consumers to base their decisions on initial pricing rather than a thorough evaluation of long-term benefits. Hyperbolic discounting encourages individuals to prioritize immediate gratification over future security, resulting in delayed insurance purchases and increased exposure to risk. The article examines how these biases influence both consumer behavior and insurance pricing, providing insights into how the industry can design products and marketing strategies that better align with consumer psychology. By integrating behavioral economics into the development of insurance policies, insurers can enhance consumer engagement, promote better risk management, and improve financial security for policyholders.

Behavioral economics, loss aversion, anchoring, hyperbolic discounting, insurance market, consumer behavior, insurance pricing, decision-making, risk management.

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