Do emotions affect insurance demand?

Abstract

Purpose: The purpose of this paper is to explore how psychological variables are related to real-life insurance consumption. Specifically, we focus on whether emotions and psychological traits can improve the predictability of insurance demand, taking traditional socioeconomic variables under control.\ud Design/methodology/approach: The approach used was in-person survey, based on a traditional questionnaire, the Barratt Impulsiveness Scale and a psycho-physiological task (Iowa Gambling Task – IGT).\ud Findings: A selective role of emotions and psychological traits has been proven to exist when comparing different insurance policies. Life and casualty insurance are affected by emotional arousal to losses; indemnity insurance by fear of the unknown, whereas health insurance by impulsivity. \ud Research limitations/implications: Our findings indicate that individual insurance consumption may be amplified by not cognitive components. Future research should concentrate on testing the effect of further psychological traits related to pure risk coverage.\ud Practical implications: Our results may be of interest for insurers in order to know what drives insurance demand with respect to different kinds of pure risks.\ud Social implications: For policymakers, it is important to understand how psychological factors affect consumer behavior in order to incorporate such perspective into modern insurance policy measures. An analysis of such factors may also increase the self-consciousness of insurance consumers and enrich consumer self-protection.\ud Originality/value: We propose an interdisciplinary approach to analyze insurance demand and test different kinds of insurance coverage, suggesting not homogenous hedging behaviors in relation to specific ambiguous events

Uncertainty and Demand for Insurance: A Theoretical Model of How Self-Control Manages the Optimal Decision-Making

“…Such inability to correctly implement the optimal plan previously formulated is due to the existence of cognitive, emotional, social, cultural, and individual factors that mislead to confuse the perceived instinctual risks of the moment with the rational risks relative to the decision to be taken (Slovic et al, 1982;Douglas and Wildavsky, 1983;Kasperson et al, 1988;Wildavsky and Dake, 1990;Loewenstein et al, 2001;Joffe, 2003;Leiserowitz, 2006;Slovic, 2010;Brighetti et al, 2014;Outreville, 2014). This confusion would cause the overvaluation of shortterm costs and benefits through a modification of the discount factor.…”

Sunflower management and life insurance: modeling the CEO’s utility function

“…Braun and Muermann, 2004; Muermann et al , 2006). Brighetti et al (2014) focus on whether emotions and psychological traits can improve the predictability of insurance demand, explicitly taking some socioeconomic variables under control. In these papers, the supply-side management is assumed to be exogenous and individuals’ preferences are assumed to be consistent with the expected utility theory.…”

Feasibility Of Wearable-Based Collective Sensing To Detect Environmental Barriers For Facilitating The Elderly’s Mobility

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