Mortgage Insurance Adoption in the Netherlands

Research output: Contribution to JournalArticleAcademicpeer-review

Abstract

Individuals tend to underinsure on low probability, high consequence risks. Using a survey data set from a unique institutional context, we provide an assessment of the underinsurance puzzle by studying mortgage insurance adoption among Dutch homeowners. The results indicate that the demand for mortgage insurance is affected by risk exposure, type of mortgage lender, and the involvement of financial advisors. We document that wealthier and younger mortgagors are more likely to insure. However, locus of control, house price expectations, and precautionary savings are not related to insurance demand. Finally, we find evidence that borrower (over)confidence negatively affects the likelihood that insurance is bought.
LanguageEnglish
JournalReal Estate Economics
DOIs
StateAccepted/In press - 2019

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Insurance
The Netherlands
Mortgages
House prices
Overconfidence
Risk exposure
Locus of control
Price expectations
Institutional context
Insurance demand
Financial adviser
Precautionary saving
Lower probabilities
Survey data

Cite this

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title = "Mortgage Insurance Adoption in the Netherlands",
abstract = "Individuals tend to underinsure on low probability, high consequence risks. Using a survey data set from a unique institutional context, we provide an assessment of the underinsurance puzzle by studying mortgage insurance adoption among Dutch homeowners. The results indicate that the demand for mortgage insurance is affected by risk exposure, type of mortgage lender, and the involvement of financial advisors. We document that wealthier and younger mortgagors are more likely to insure. However, locus of control, house price expectations, and precautionary savings are not related to insurance demand. Finally, we find evidence that borrower (over)confidence negatively affects the likelihood that insurance is bought.",
author = "R. Cox and R.C.J. Zwinkels",
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journal = "Real Estate Economics",
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Mortgage Insurance Adoption in the Netherlands. / Cox, R.; Zwinkels, R.C.J.

In: Real Estate Economics, 2019.

Research output: Contribution to JournalArticleAcademicpeer-review

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