An international study on factors determining flood insurance demand in Europe. Role of risk assessment and country of residence

The paper investigates the determinants of household demand for flood insurance in four European countries with high flood exposure: Poland, the Netherlands, Germany, and Spain. Using primary data collected from 1,494 households located in the flood-prone areas, the analysis examines ten potential factors influencing insurance purchase. Three hypotheses are tested: 1) The factors that most strongly influence the willingness to buy flood insurance differ between countries; 2) Insured people are guided by different factors than uninsured people; 3) People assessing the flood risk as higher are guided by different factors than people assessing the flood risk as lower. Hypothesis 1 is confirmed: significant cross-country differences exist for eight of the ten factors. In Poland and the Netherlands, respondents discriminate more strongly among factors than in Germany and Spain. Logistic regression reveals pronounced country-specific patterns: in Poland five factors are significant predictors of current insurance ownership (potential inaffordability of losses, firsthand observation of flood damage, peer insistence, premium level, and state subsidies); in the Netherlands only perceived flood probability; in Germany only persuasion by family/friends/neighbors; and in Spain only the prospect of abolished state aid after floods. Hypothesis 2 is supported overall and within most countries: insured households assign higher importance to risk-related and experiential factors, whereas uninsured households emphasize the cost-related aspects. Hypothesis 3 is also confirmed: respondents perceiving high subjective flood risk prioritise perceived probability and firsthand damage observation, while those perceiving low-to-medium risk focus on potential unaffordability of losses.