Homeowners' Perceptions of Climate Risk and the Insurance Protection Gap

Wendy Disch
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Wendy Disch: Central Bank of Ireland

No 14/SI/26, Central Bank Staff Insights from Central Bank of Ireland

Abstract: Widespread insurance coverage makes both society and the economy more resilient to climate-related risks. As properties with high flood risk exposure struggle to access insurance coverage, the insurance "protection gap" widens. We explore insurance uptake by homeowners as well as their perceptions on various climate-related risks. Using survey data of Irish homeowners, we find that the majority of homeowners (73%) are concerned about climate change, yet worries about specific natural disasters are less pronounced. We also find that 46% would support a 1-3% increase on their home insurance premium in order to help provide insurance coverage to vulnerable homes. Acceptance of a premium increase is sensitive to cost and is strongly associated with perceived flood risk, demographic characteristics, climate change attitudes and trust in government and insurers.

Date: 2026-09
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