Granular Pricing and Effective Withdrawal in Climate-Exposed Household Insurance in France

Raphael Dalbarade (), Arthur Charpentier (), Laurence Barry and Caroline Hillairet
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Raphael Dalbarade: ENSAE-CREST, Institut Polytechnique de Paris, GCL - Generali Climate Lab
Arthur Charpentier: UQAM - Université du Québec à Montréal = University of Québec in Montréal
Laurence Barry: Chaire PARI (Palaiseau)
Caroline Hillairet: ENSAE-CREST, Institut Polytechnique de Paris

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Abstract: Climate change increases the value of fine-scale risk information in household insurance, but its competitive use may weaken pooling and reduce effective availability in exposed areas. We study this mechanism in the French Cat-Nat system, where natural-catastrophe coverage is formally pooled through a regulated surcharge but accessed through the underlying household-insurance contract. First, we use controlled online quote requests to compare otherwise identical addresses with different flood or clay shrink-swell exposure. The evidence shows heterogeneous insurer responses: coarse pooling, within-commune premium differentiation, and non-quoting in some exposed micro-locations. Second, we develop a stylized dynamic pricing game with insurers that differ in pricing granularity. Numerical equilibria show that fine segmentation attracts low-risk households, shifts high-risk households toward less granular insurers, and erodes implicit cross-subsidies. Market-share constraints mainly slow this reallocation. The results highlight why climate-insurance governance must monitor local availability, not only formal coverage or aggregate market presence.

Keywords: Household insurance; climate risk; pricing granularity; insurer withdrawal; dynamic game (search for similar items in EconPapers)
Date: 2026-06-06
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