How to Increase Flood Insurance Take-Up Using Behavioral Economics Insights

April 9, 2021 by Alexa Wiese

Proper application of behavioral economics can improve take-up of flood insurance and narrow the protection gap. Sounds farfetched? Let’s dig deeper.

Behavioral economics is the study of psychology, economics and the decision-making process of humans. It helps us understand why people consistently deviate from rational action when making decisions. In other words, why would someone who lives in a flood-prone region choose not to buy flood insurance?