When Disaster Drives Demand: Evidence on Home Insurance Take-Up in Brazil

Home insurance plays a key role in mitigating the economic and social impacts of natural disasters. This paper investigates whether the occurrence of a severe natural disaster affected the demand for home insurance in Brazil. We collect weekly sales data from the dominant insurance company with national presence, and exploit the May 2024 flood—the most severe natural disaster in the federal state of Rio Grande do Sul’s recent history—as an exogenous shock which we evaluate using Bayesian structural time-series methods (CausalImpact). We estimate that home insurance sales in Rio Grande do Sul exceeded their counterfactual by roughly 184 policies, or about 95%, over the first eight weeks following the event, while the difference is indistinguishable from zero thereafter; averaged over the full 35-week observation window, the excess is 19.6%. The timing of the response, together with additional evidence on the mechanism, is consistent with a temporary shift in the weight attached to low-probability losses rather than a lasting revision of beliefs.