Should I Stay or Should I Go? The Impact of Natural Disasters and Regulation on U.S. Property Insurers’ Supply Decisions

Abstract

In this article, we identify the main factors that drive insurers’ willingness to offer coverage in catastrophe‐prone property insurance lines. We compare insurers’ supply decisions in personal and commercial lines, with an emphasis on insurers’ responses in the aftermath of natural disasters. Our empirical results suggest important policy implications with regard to improving the availability of insurance against catastrophic threats. Concerning the impact of regulatory constraints, we present empirical evidence that certain regulatory responses may unintentionally impede insurers’ willingness to provide coverage against natural disasters.

Social Marketing Analysis of Attitude Toward Compulsory Earthquake Insurance in Turkey(Türkiye’de Zorunlu Deprem Sigortasına Yönelik Tutumun Sosyal Pazarlama Kapsamında Analizi)

“…Without effective marketing communications the cognitive, affective and conative elements of attitudes towards CEIP would not be established. Moreover, the willingness of homeowners to provide coverage against natural catastrophic threats is also influenced by the level of ambiguity (Born and Klimaszewski-Blettner, 2013;Athavale and Avila, 2011) they felt. When people encounter ambiguous information about the insurance polices and potential risks they tend to refrain from the purchase.…”

The Role of Insurance in Reducing Direct Risk - The Case of Flood Insurance

“…The decision to offer coverage can be influenced by the loss experience, regulatory requirements and the overall market conditions. Born and Klimaszewski-Blettner (2013) investigate the impact of natural disaster losses and regulation on the supply decisions of property insurers in the United States. Their empirical evidence suggests that home insurers are more likely to reduce their cover supply in response to unexpected severe events, while business insurers appear less likely to change their coverage in response to changes in severity or frequency of loss events (Born and Klimaszewski-Blettner, 2013).…”

“…Born and Klimaszewski-Blettner (2013) investigate the impact of natural disaster losses and regulation on the supply decisions of property insurers in the United States. Their empirical evidence suggests that home insurers are more likely to reduce their cover supply in response to unexpected severe events, while business insurers appear less likely to change their coverage in response to changes in severity or frequency of loss events (Born and Klimaszewski-Blettner, 2013). No similar research has been conducted in markets across the EU, but it is obvious that after a flood event, for instance, private insurers review their market position, pricing and coverage offers -which may trigger a re-assessment of the way flood insurance is provided, as currently seen in the United Kingdom.…”

Investigating the Difference in Policy Responses to the 2004 and 2005 Hurricane Seasons and Homeowner Insurance Crises in Florida and Louisiana

“…The 2004 property insurers tend to overweigh recent events and refuse to extend or offer new coverage in response to unexpectedly large hurricane losses (Aseervatham et al, 2015;Born and Klimaszewski-Blettner, 2013;Burt et al 2009;Kunreuther et al, 2013, p. 175). Property insurers also tend to charge actuarially excessive premiums when the risks of future losses are ambiguous (Kunreuther et al, 1995(Kunreuther et al, , 2013, as they are in the case of hurricanes.…”