The likelihood of having flood insurance increases with social expectations

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Lo, Alex
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2013
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Flood insurance can reduce potentially disastrous economic losses to households. As climatic uncertainties grow, governments have increasingly found the social costs of non-insurance prohibitive. Attempts to improve insurance coverage could benefit from a characterisation of the insured and uninsured households. The dominant view holds that the insured household is more risk aware and more likely to consider the costs of insurance to be affordable. In a survey of residents of Brisbane, Australia, however, the risk and income effects were found to be not significant. Instead, perception of social response predicted insurance status. The likelihood of insuring against flooding increases if individuals expect the same action from other people or affirmation from family members or friends. Adoption of flood insurance is associated with perceived social expectations. Flood managers, policymakers and insurers should address these social determinants head-on in order to improve insurance coverage.

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45

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1

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Physical geography and environmental geoscience

Human geography

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