Perceptions over flood insurance in Australia

Abstract

This study reviews perceptions over flood insurance and the purchase of this measure among residents living in Southeast Queensland, Australia. The decision of householders living in eleven suburbs in Brisbane to take up flood insurance is analysed by an exploratory model that regresses a polar dependent variable with 22 independent variables directly associated with flood insurance experience. The main findings, based on a questionnaire personally delivered to 1796 householders (homeowners and renters) randomly selected and representing a survey return rate of 26.16% (N = 469), are (i) the need to review and include a clear definition of ‘flooding’ in insurance policies to minimize unexpected surprises by policyholders claiming coverage for this hazard; (ii) the neutral influence that insurers’ recommendations exert on householders’ decisions to engage in residential flood risk reduction measures; (iii) the self-reliance of householders living in risky areas even in the absence of financial relief provided by public flood insurance schemes; and (iv) the objection of householders to increased insurance premiums based on updates of flood hazard maps. The findings from this case study are assessed based on a literature review before making policy recommendations.