Setting descriptive norm nudges to promote demand for insurance against increasing climate change risk

Natural disaster losses are projected to increase worldwide, in part due to climate change. As well as offering financial protection against the impacts of climate change, insurers can promote behavioural change by stimulating individuals’ preparedness choices. Norm nudges aim to improve preparedness for risks through information provision that appeals to social norms. Based on data collected in an online experiment among homeowners, we tested for the influence on flood insurance demand of providing individuals with a norm nudge about the flood insurance purchase decisions of their neighbours. Potential moderators of the effectiveness of this norm nudge were examined, such as whether the norm is consistent with homeowners’ prior beliefs as well as whether homeowners trust insurance agents, who are used as the messenger of the norm. Based on this investigation, we suggest recommendations for policies that aim to improve preparedness against increasing losses related to climate change.