IMPLEMENTATION OF BEHAVIOURAL SCIENCE APPROACHES IN INSURANCE ACTIVITIES

Abstract

The article states that insurance is a special part of the financial system that has its own specific characteristics, which are largely determined by the behavioural aspects of interaction between insurance participants, most people are not inclined to make rational decisions in risky situations and are guided by other motives, behavioural models add various cognitive factors to the decision-making process in insurance. The author determines that insurance is perceived according to the theory of utility, taking into account the peculiarities of people's attitude to unlikely events, underestimation of the consequences of events with high probability, choice of inadequate insurance coverage, irrational behaviour in situations involving uncertainty and risk. It is substantiated that behavioural science makes it possible to improve each stage of the insurance process by simplifying and optimising the insurance application process, ensuring that insurers select the optimal policy in accordance with the needs of the insured, and improving the interaction of participants. The study identifies the potential areas of application of behavioural approaches by insurers: understanding the biased behaviour of existing and potential insurers; better understanding of insurers' preferences; redesign of underwriting in insurance; helping insurers live longer and healthier lives; and more effective support of insurers during claims processing. The research proves that conflicts of interest may arise in the interaction of insurance participants, which need to be resolved taking into account the behavioural aspects of their interaction. It is found that, being at the intersection of psychology, sociology, neuroscience and economics, behavioural science focuses on applying a true understanding of human behaviour to solve practical problems, including those in insurance. The publication establishes that the application of behavioural science approaches in insurance will improve the interaction of participants, make it more efficient and transparent, which is why it is necessary to continue to comprehensively explain the behavioural biases of insurance market participants in order to be able to predict their behaviour, minimise negative consequences and, if possible, correct them.