Willingness to Pay for Multi-peril Hazard Insurance

Landry, Craig E.; Anderson, Sarah; Krasovskaia, Elena; Turner, Dylan

doi:10.3368/le.97.4.072820-0115r1

Cited by 4 publications

(2 citation statements)

References 43 publications

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“…While there is a significant body of literature on past changes to insurance premiums, the literature on future changes to insurance premiums is limited (Bouwer 2013;Pastor-Paz et al 2020;Phelan 2011). Much of the existing literature focuses on questions of consumer willingness to pay for insurance rather than insurers' willingness to supply insurance (Booth et al 2022;Browne et al 2015;Dixon et al 2017;Landry et al 2021). In most locations, it seems that markets are not pricing the retreat of insurance as in many jurisdictions, governments increasingly are appearing willing to act as the insurer of last resort when insurance supply is disrupted following major catastrophes (Binskin et al 2020;Furukawa et al 2020;Jarzabkowski et al 2019;Kousky 2019;Kraehnert et al 2021;Lucas et al 2021;PRA 2015).…”

Section: Literature Reviewmentioning

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events induced by sea level rise impact residential insurance premiums, and when would insurance contracts be withdrawn?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: Literature Reviewmentioning

confidence: 99%

Insurance retreat in residential properties from future sea level rise

Storey,

Owen,

Zammit

et al. 2023

Preprint

View full text Add to dashboard Cite

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“…Yet, only about 30% of US households in FEMA-designated special flood hazard areas (SFHAs) have a flood insurance policy (Kousky, Kunreuther, et al, 2018). A number of explanations for this have been proposed, including moral hazard (Kousky, Michel-Kerjan, & Raschky, 2018;Landry, Turner, & Petrolia, 2021), affordability of premiums (Kousky & Kunreuther, 2014;Netusil et al, 2021), and the cognitive burden and hassle of obtaining additional insurance (Landry, Anderson, et al, 2021).…”

Section: Introductionmentioning

confidence: 99%

Flood Risk Perceptions: Accuracy, Determinants, and the Role of Probability Weighting

Turner,

Landry

2023

Land Economics

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This study analyzes survey data of US east coast homeowners to characterize accuracy and determinants of homeowner flood risk (mis)perceptions. Using an array of instruments, we assess subjective risk perceptions and compare them to objective risk estimates. Reduced-form regressions suggest flood experience, worry, and flood zone classification influence relative perceptions of risk. Common probability weighting functions do not fit the divergence in risk perceptions, suggesting that the source of the probability distortions is most likely due to misperceiving the true risk rather than a widespread behavioral heuristic.

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Insurance retreat in residential properties from future sea level rise in Aotearoa New Zealand

Storey,

Owen,

Zammit

et al. 2024

Climatic Change

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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, in order 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 (with less than 10 cm of sea level rise). Our modelling predicts that full insurance retreat is likely within 20–25 years, with timing dependent on the property’s elevation and distance from the coast, and less intuitively, on the tidal range in each location.

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Willingness to Pay for Multi-peril Hazard Insurance

Abstract: Increasing the number of insured assets in high risk areas can help reduce the need for federal disaster aid and help communities rebuild quicker following a disaster event.Offering a bundled multi-peril homeo ner in rance prod c ma be one a o do hi .

Cited by 4 publications

References 43 publications

Insurance retreat in residential properties from future sea level rise

Insurance retreat in residential properties from future sea level rise

Flood Risk Perceptions: Accuracy, Determinants, and the Role of Probability Weighting

Insurance retreat in residential properties from future sea level rise in Aotearoa New Zealand

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