Behavioural biases in automobile insurance decisions in Malta

Abstract

This thesis investigates the impact of status quo and framing biases on automobile insurance decision-making among consumers in Malta, addressing a notable gap in regional behavioural economics research. The primary aim is to examine the extent to which these biases influence consumer loyalty and policy selection within the Maltese insurance market. A quantitative research methodology was employed, utilising structured surveys to collect data on consumer responses to various presentations of insurance policies and their tendencies to remain with existing insurers. The data were analysed using statistical tools, including logistic regression models, to assess the impact of these biases on decision-making processes. The findings indicate that status quo bias significantly influences consumer loyalty, leading to a strong preference to remain with their current insurance provider, even when potentially superior alternatives are available. Additionally, framing bias was found to affect consumer decisions, particularly regarding how information about insurance policies is presented, highlighting the importance of effective communication strategies within the insurance industry. These results suggest that certain variations may arise due to the unique characteristics of the local automobile market and cultural factors. However, Maltese consumers exhibit behavioural biases similar to those observed in other contexts. The conclusions drawn from this research underscore the need for insurance providers and policymakers to acknowledge and address these biases. By doing so, they can enhance consumer decision-making, promote a more active evaluation of insurance options, and ultimately improve market efficiency. The implications of these findings are critical for the development of strategies aimed at enabling consumers to make more informed and beneficial insurance choices, thereby contributing to a more efficient and effective insurance market in Malta