By Eli Sandberg and Berit Time, SINTEF

Homeowners are becoming more aware of the risk of climate-related damage

Insurance companies should take advantage of this.

Over the past ten years, compensation for water and natural damage to buildings and movable property has amounted to over three billion euros in Norway. Damage from extreme rainfall accounts for about half of the damage.

Insurance companies, banks, homeowners, and society benefit from preventive measures for our homes against the weather. Therefore, SINTEF has asked Norwegian homeowners how they relate to climate change and how insurance companies can reward climate change adaptation of homes.

The survey was conducted as part of the project “Climate change adaptation of dwellings – A toolbox” in 2022 and is a highly important input of knowledge for the insurance solutions being developed in the SOTERIA project.

Young people are most concerned about climate-related damage

37 percent of those who responded to the survey have experienced damage to their homes that may be climate-related. And nearly half report that they are concerned about climate-related damage to their homes.

Younger individuals, as well as those with advanced education and higher income levels, tend to express greater concern than others. It also appears that people living on the west coast of Norway, which is generally more exposed to harsh weather, are more concerned about the consequences of climate change than people in other parts of the country.

Willing to pay more for climate change-adapted homes

Over 90 percent of respondents state that they are willing to pay an additional cost for a climate change-adapted home, and 60 percent are willing to pay more than 4,000 euros extra for a house valued at 400,000 euros.

It is mainly those with the highest education and income who are willing to pay more for a climate change-adapted home. The majority of those under 35 years old are willing to pay more for a climate change-adapted home.

66 percent believe that a state support scheme for climate change adaptation measures should be established.

We want favourable insurance products

Most respondents want insurance products that reward climate change adaptation. Nearly half would consider subscribing to a notification service that reminds them of maintenance and replacement. This proportion increases to 64 percent if this can be included in an insurance product.

74 percent want a professional home inspection before taking over a new home to be included in home insurance, while 70 percent would also consider a new home inspection after four years. However, interest in a home inspection drops to 45 percent if they must pay 170 euros for it.

Half would consider an hour of advice on how to prevent climate-related damage to their home. 37 percent want advice on whether they must cover the cost of 70 euros themselves. They primarily want advice from the home builder (31 percent), followed by an independent consultant (28 percent), and the insurance company (27 percent).

Location is still the most important

Despite increased awareness of climate change and its consequences, it turns out that location is still the most important factor when Norwegians are looking for a home, followed by standard and lifecycle standard, size, and proximity to services. This is most evident among the older part of the population.

Climate-resilient solutions will hopefully become more important in the years to come. Many point out that they lack the competence needed to implement measures themselves. Therefore, it is important to define climate change-adapted homes and set competence requirements for the professionals who will offer advice and home inspections.

Although most believe the state must play a bigger role, we believe that insurance companies and banks should also contribute more to strengthen the incentives to protect buildings against more extreme weather, both permanent changes (e.g., more precipitation) and acute events.

The sample consisted of 250 people, aged 18 and older. The target group was those who have built a home in the last five years or who plan to build a home in the next five years. The article was first published in Norwegian in FinansWatch on November 17, 2022, and is reproduced here with permission.