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

Nguyen, Cuong

doi:10.1111/disa.12371

Cited by 21 publications

(4 citation statements)

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“…This unbundling would have wide-ranging implications for the local insurance market. Without an all-hazards insurance system, it is likely that the current exceptionally high levels of residential insurance for natural hazards will be difficult to maintain, and that will have consequences for the outcomes after disasters (Nguyen and Noy 2020). This is especially important as this specific-hazard retreat will almost certainly exclude the very hazard(s) that pose the greatest threat to the property.…”

Section: Discussionmentioning

confidence: 99%

Insurance retreat in residential properties from future sea level rise

Storey,

Owen,

Zammit

et al. 2023

Preprint

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How will the increased frequency of coastal inundation events induced by sea level rise impact residential insurance premiums, and when would insurance contracts be withdrawn? We model the contribution of localised sea level rise to the increased frequency of coastal inundation events. Examining four Aotearoa New Zealand cities, we combine historical tide-gauge extremes with geo-located property data to estimate the annual expected loss from this hazard, for each property, to establish when insurance retreat is likely to occur. We find that as sea level rise changes the frequency of inundation events, 99% of properties currently within 1% AEP coastal inundation zones can expect at least partial insurance retreat within a decade (associated with less than 10cm of sea level rise). Our modelling predicts that full insurance retreat is likely within 20 - 25 years, with timing dependent on the tidal range in each location, and, more intuitively, on the property’s elevation and distance from the coast.

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Section: Discussionmentioning

confidence: 99%

Insurance retreat in residential properties from future sea level rise

Storey,

Owen,

Zammit

et al. 2023

Preprint

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“…The mandatory characteristic of natural hazard insurance in New Zealand allows us to investigate its impact without this selection bias, and indeed a few papers have already examined the role of insurance in economic recovery more broadly in New Zealand Nguyen andNoy 2020a) used change in nightlights to measure the economic recovery of households, while Poontirakul et al 2017 relied on surveyed responses from firm managers to examine how firms fared in the aftermath of the Christchurch earthquake. No paper, as far as we know, has investigated directly the role of insurance (or other forms of compensation/assistance) in post-disaster housing markets, in New Zealand, or elsewhere.…”

Section: The Literature and The Contextmentioning

confidence: 99%

Redrawing of a Housing Market: Insurance Payouts and Housing Market Recovery in the Wake of the Christchurch Earthquake of 2011

Nguyen

Sommervoll²,

Yao

2020

SSRN Journal

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On the 22nd of February 2011, much of the residential housing stock in the city of Christchurch, New Zealand, was damaged by an unusually destructive earthquake. Almost all of the houses were insured. We ask whether insurance was able to mitigate the damage adequately, or whether the damage from the earthquake, and the associated insurance payments, led to a spatial reordering of the housing market in the city. We find a negative correlation between insurance payouts and house prices at the local level. We also uncover evidence that suggests that the mechanism behind this result is that in some cases houses were not fixed (i.e., owners having pocketed the payments) -indeed, insurance claims that were actively repaired (rather than paid directly) did not lead to any relative deterioration in prices. We use a genetic machine-learning algorithm which aims to improve on a standard hedonic model, and identify the dynamics of the housing market in the city, and three data sets: All housing market transactions, all earthquake insurance claims submitted to the public insurer, and all of the local authority's building-consents data. Our results are important not only because the utility of catastrophe insurance is often questioned, but also because understanding what happens to property markets after disasters should be part of the overall assessment of the impact of the disaster itself. Without a quantification of these impacts, it is difficult to design policies that will optimally try to prevent or ameliorate disaster impacts.

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“…Indeed, even in high-income high-insurance-penetration countries like the United States, many hazard risks are underinsured. For example, fewer than 13% of homes are covered for earthquakes in earthquake-prone California (Nguyen & Noy, 2020), and only about 30% of homeowners in the city of Houston were insured when their homes were flooded by Hurricane Harvey in 2017 (Smiley et al, 2021). This insurance gap is not a uniquely American phenomenon; indeed, it is true globally for practically any catastrophic natural hazard that is not insured by a mandatory public insurance scheme.…”

mentioning

confidence: 99%