Working Paper

Natural disasters and the demand for health insurance

Published: 2024

Natural disasters have profound repercussions on various societal aspects globally, affecting social dynamics, health outcomes, and economic stability. Scholarly inquiries have underscored the pivotal role of insurance as a primary coping mechanism adopted by individuals impacted by natural disasters to mitigate the risks associated with future calamities. However, prevailing research predominantly delves into the nexus between natural disasters and residential insurance, primarily aimed at shielding individuals from subsequent physical property damages. This exclusive focus may inadvertently overlook potential alternative strategies that affected individuals employ to mitigate future health-related risks stemming from such disasters. This study contributes to the academic discourse by broadening the scope of investigation to encompass the influence of natural disasters on the demand for health insurance.

By capitalizing on over two decades of nationally representative longitudinal data from the Household, Income and Labour Dynamics in Australia (HILDA) survey linked to historical cyclone records, this study pioneers an inquiry into the causal impacts of cyclones on the demand for private health insurance (PHI). Our findings unveil that both contemporaneous and preceding cyclones, particularly those of greater severity, substantially increase the likelihood of individuals procuring PHI. The largest estimated impact amounts to over 4 percentage points, representing approximately 8% of the sample mean and aligns with documented effects of certain PHI policies aimed at enhancing coverage. Furthermore, our findings withstand a series of sensitivity assessments, including a placebo test demonstrating that future cyclones do not impact current PHI enrolment. Moreover, the cyclone impacts are more pronounced for females, younger individuals, homeowners, affluent individuals, or those with prior residential insurance coverage, as well as residents of rural and coastal areas or historically cyclone-exposed regions. Additionally, our study furnishes suggestive evidence hinting at a potential rise in risk aversion among affected individuals as a channel through which cyclones increase PHI uptake.

This study contributes novel and robust evidence regarding the impact of natural disasters, specifically cyclone exposure, on the demand for health insurance. The identification of an increased likelihood of PHI uptake among individuals from economically advantaged backgrounds, particularly indicated by homeownership or higher income, underscores the necessity for tailored support policies targeting vulnerable populations to utilize this natural disaster coping mechanism.


Nguyen, H.T., & Mitrou, F. (2024). ‘Natural disasters and the demand for health insurance’, Life Course Centre Working Paper Series, 2024-14. Institute for Social Science Research, The University of Queensland.