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When you get that familiar reminder every year: ".Your car insurance is about to expire, please renew it as soon as possible!Have you ever wondered what the economic logic behind this is?
Why auto insurers are so eager to push customers to renew their policies, and all thisIt seems to have nothing to do with the "time value".In fact, it is deeply rooted in the deep theories of economics.
First, we need to understand the profit model of insurance companies.
The insurer's profits** include premium income as well as investment income.
On the one hand, insurance companies collect premiums from their customers, and on the other hand, these premiums are used for investments in various areas such as **, bonds, etc.
Therefore,Insurance company calls are actually about getting the money as soon as possible so that it can be put into the financial markets as soon as possible.
But that's not all.
Another reason why auto insurance companies call for insurance in advance is related to the "immediate preference" theory in "behavioral economics".
Immediate preference refers to the tendency of people to prefer immediate returns over the future.
Auto insurance companies take advantage of this psychological trait,By calling for insurance in advance, customers are encouraged to renew their insurance as soon as possible, so as to ensure the stability and timeliness of capital flow.
In addition, there is another idea that is quite novel: early reminder is actually a manifestation of the "anchoring effect".
The anchoring effect is when people are influenced by their first exposure to information when making decisions.
By urging insurance in advance, the car insurance company is actually setting a "psychological anchor".This allows the customer to renew the original insurance by default without comparing other insurance products.
This strategy cleverly exploits people's habitual thinking and increases the likelihood of renewal.
However, there is a deeper economic principle behind this:Information asymmetry.
In the insurance market, insurance companies often have more information than consumers.
By analysing large amounts of data, they are able to pinpoint exactly when the call is most effective to maximize profits.
So, in the face of such a situation, what should car owners do?
First of all,Don't renew your policy blindly。When you receive a reminder, it's a good idea to compare the offerings and services of different insurers** first.
Second, understand your insurance needsDon't be swayed by the insurance company's marketing strategy
Here, we ask a question that seems unrelated to car insurance:Why is the milk in the supermarket always put in the innermost?
This problem is actually similar to the logic of the car insurance company's expediency in advance.
The supermarket puts the milk in the innermost,It's to get consumers to walk through the entire supermarket so that they can buy more goods.
Similarly, car insurance companies call for insurance in advanceIt is also to "guide" consumers to renew their insurance as soon as possible, so as to achieve its profit purpose.
In both cases, the "default effect" principle in behavioral economics is applied, whereby people tend to choose the default or easily accessible option in a given setting.
With a deeper understanding of these economic principles, consumers can make more informed decisions without potential market manipulation.
What do you have to say about this?Feel free to leave your thoughts in the comment section!
Note: Original debut, plagiarism must be investigated to the end!
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