All-Hazards Homeowners Insurance: Challenges and Opportunities

Kunreuther, Howard

doi:10.2139/ssrn.2891369

Cited by 11 publications

(11 citation statements)

References 24 publications

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“…It would also avoid consumer confusion as to what perils are covered and simplify insurance purchases by reducing search and transaction costs since only one policy would be needed. Further, following a disaster, policyholders would only have to make a single claim, thus reducing arguments and post-hurricane litigation as to whether the resulting damage was caused by wind or water (Kunreuther, 2018b). An all-hazards insurance policy could benefit lenders by offering more protection to their loans.…”

Section: Beyond Single Peril Flood Insurancementioning

confidence: 99%

Flood Risk and the U.S. Housing Market

Kousky

Kunreuther

LaCour‐Little³

et al. 2020

Journal of Housing Research

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Flooding is the most frequent and costliest natural disaster in the United States, yet most households are uninsured or underinsured against flood and may incorrectly expect that government agencies provide sufficient post-flood assistance. This paper synthesizes existing research on flood risks, flood insurance, and their impacts on the U.S. housing market. We focus on the single-family market segment, as primary residences tend to be the largest category of wealth for most households. We conclude with policy implications and suggestions for future research.

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Section: Beyond Single Peril Flood Insurancementioning

confidence: 99%

Flood Risk and the U.S. Housing Market

Kousky

Kunreuther

LaCour‐Little³

et al. 2020

Journal of Housing Research

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“…It is not obvious why insurance in New Zealand is offered only with all‐perils cover, although it probably has to do with history and the limited competition that exists in this small market. All‐perils cover leads to higher penetration rates for low‐probability, high‐impact natural hazards such as earthquakes (Kunreuther, 2018). In addition, as one of the authors has lived in all three countries, our impression is that the marketing of insurance is much more aggressive and persistent in New Zealand—mostly by the banks that also operate as insurance brokers—than it is in California or Japan where that function is separate.…”

Section: Why Is the Insurance Take‐up Rate So Much Lower In Californimentioning

confidence: 99%

Comparing earthquake insurance programmes: how would Japan and California have fared after the 2010–11 earthquakes in New Zealand?

Nguyen

2019

Disasters

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Earthquakes are insured in high‐risk high‐income countries only if the public sector is involved. Prototypical examples are the insurance schemes in California (United States), Japan, and New Zealand, but each is structured differently. This paper examines these variations using a concrete case study: the sequence of earthquakes in Christchurch, New Zealand, in 2010–11—the most heavily insured seismic event in history. It assesses what would have been the outcome had the Christchurch insurance system been different, focusing on the California Earthquake Authority (CEA) programme and Japan Earthquake Reinsurance (JER). Overall, the aggregate cost of the earthquake to the New Zealand public insurer (Earthquake Commission) was USD 6.2 billion. If a similar‐sized disaster had occurred in Japan and California, homeowners would have received around USD 1.6 billion and USD 0.7 billion, respectively. This paper describes the distributive and spatial patterns of these scenarios and discusses some key policy questions that emerge from this comparison.

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“…Banks require homeowners to have flood coverage only when it is mandated by law. Bundling flood and earthquake insurance into the homeowners’ coverage as a condition for a mortgage would dramatically increase take‐up rates in the United States (Kunreuther, ). In this regard, flood coverage is much more widespread in the United Kingdom, where it is a part of homeowners insurance and required by lenders (Surminski, ).…”

Section: Roles Of the Public And Private Sectorsmentioning

confidence: 99%

“…Following Hurricane Katrina, insurers spent considerable time and money fighting lawsuits from policyholders who contended that damage to their homes was due to wind, in which case the standard homeowners' policy would cover the losses, rather than inundation. An all‐hazards policy would avoid this problem (Kunreuther, ). Financial assistance for low‐income homeowners would be provided by the government in the form of tax credits or vouchers based on specified criteria for household income or house value.…”

Section: Roles Of the Public And Private Sectorsmentioning

confidence: 99%

Risk Management Roles of the Public and Private Sector

Kousky¹,

Kunreuther²

2018

Risk Manage Insurance Review

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Insurance is an essential component of household and community resilience. It protects insureds financially against disaster losses, can encourage investments in cost‐effective mitigation measures through premium reductions, and facilitates the rebuilding of property and long‐term recovery. Private insurers face challenges in providing full protection against disasters. This has led governments around the world to create a variety of public insurance entities, often designed as public‐private partnerships. At a November 2016 workshop, “Improving Disaster Financing: Evaluating Policy Interventions in Disaster Insurance Markets,” participants evaluated disaster insurance programs for flood, earthquake, and terrorism losses. This article synthesizes six papers and findings from the workshop and suggests ways to improve public‐private partnerships for disaster financing in three interrelated areas: (1) risk communication, (2) risk reduction, and (3) risk transfer. It concludes with a proposal for a comprehensive insurance program that could harness the benefits of both the public and private sectors.

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All-Hazards Homeowners Insurance: Challenges and Opportunities

Cited by 11 publications

References 24 publications

Flood Risk and the U.S. Housing Market

Flood Risk and the U.S. Housing Market

Comparing earthquake insurance programmes: how would Japan and California have fared after the 2010–11 earthquakes in New Zealand?

Risk Management Roles of the Public and Private Sector

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