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Can we nudge insurance demand by bundling natural disaster risks with other risks?

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  • Peter John Robinson

    (Department of Environmental Economics, Institute for Environmental Studies, VU University Amsterdam, The Netherlands)

  • W. J. Wouter Botzen

    (Utrecht University School of Economics (U.S.E.), Utrecht University, The Netherlands)

Abstract

One question for policymakers is whether demand for natural disaster insurance is impacted by including coverage in a bundled policy alongside other perils, rather than as a separate policy. We examine this question with data collected among homeowners in the Netherlands and the United Kingdom (UK). Our findings show that demand is higher to insure separate risks than to cover all risks together in a bundled insurance policy in the UK, whereas no significant difference is found between demand for bundled vs. single policy insurance in the Netherlands. This difference in preference across the two countries is associated with whether individuals have been flooded, which is more often the case in the UK than the Netherlands. Based on the results we suggest implications for policymaking.

Suggested Citation

  • Peter John Robinson & W. J. Wouter Botzen, 2023. "Can we nudge insurance demand by bundling natural disaster risks with other risks?," Journal of Behavioral Economics for Policy, Society for the Advancement of Behavioral Economics (SABE), vol. 7(2), pages 39-46, December.
    • Handle: RePEc:beh:jbepv1:v:7:y:2023:i:2:p:39-46
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