FACTORS INFLUENCING HOMEOWNERS' DECISION TO PURCHASE FLOOD INSURANCE IN FLOOD-PRONE AREAS OF IMO STATE, NIGERIA.
Keywords:Flooding, Insurance, Residential properties, Perception, Imo State.
Severe floods have become an annual experience in Imo State inflicting losses of lives and property on the population. The most affected areas are Oguta, Ohaji/Egbema and Owerri. This situation notwithstanding, most homeowners in these areas have not taken advantage of flood insurance facility. This study seeks to identify the factors affecting homeowners' flood insurance purchase decisions in Oguta, Ohaji/Egbema and Owerri. Applying the discriminant analysis technique on those factors, the study seeks to determine whether or not there are significant differences in perception between those willing to purchase flood insurance and those not willing. The study equally seeks to determine the variables that best account for the differences in perception between the two groups. Tests using Wilks’ lambda, eigenvalues, canonical correlation, functions at group centroids, and classification accuracy were applied on identified sets of relevant determinants. The study identified five main factors comprising twenty five variables. Of the twenty five variables, fifteen were found to have strong influence on the decisions/dispositions of the two sets of homeowners (those willing and those not willing to purchase flood insurance) towards the purchase of flood insurance. The variables with the most predictive power in accounting for the differences in perception and have the highest impact were found to be within the measures of behavioral, attitudinal and emotional determinants. The study therefore concludes that the likelihood of purchasing flood insurance in the study areas depends greatly on the availability of insurance information, consumers’ insurance literacy and level of trust on the integrity of insurance companies.
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