Erratum: A Comparative Study of Public–Private Catastrophe Insurance Systems: Lessons from Current Practices

Abstract

Award of the VU University. Currently, Botzen is working on projects dealing with natural disaster insurance, climate change adaptation and decision-making under uncertainty. He has published many articles on these topics. Jeroen C.J.H. Aerts is a professor in risk insurance and water management. His research and consultancy activities include a vast number of international risk and water-resources management projects in the Netherlands, Central Asia, Bangladesh, Kenya, Southern Africa, India, Vietnam and the U.S. Professor Aerts has contributed to the IPCC First Assessment Report, Working Group II and is theme coordinator of the Dutch adaptation research programme BSIK-KvR. He has published over 70 peer-reviewed papers.

Risk reduction in compulsory disaster insurance: Experimental evidence on moral hazard and financial incentives

“…Flood risk insurance is often mandatory or at least heavily regulated when provided by private insurers. The implementation of mandatory insurance in our experiment closely resembles the characteristics of many natural disaster insurance markets (Paudel et al, 2012), for which it is impossible to distill moral hazard by survey and market data because a control group without insurance coverage does not exist in practice. Our experiment investigated the effect of deductibles, financial incentives, and time and risk preferences on private investments for reducing disaster risk damage.…”

Behavioral motivations for self-insurance under different disaster risk insurance schemes

“…As a response to this problem, researchers have investigated potential risk reduction strategies, such as flood protection infrastructure like dikes (Kreibich et al, 2015) and disaster risk insurance schemes (Michel-Kerjan, 2010;Kunreuther, 2015;Hudson et al, 2016). In the EU, a variety of arrangements exist in member states for compensating flood losses, including public insurance which is often mandatory and private market insurance which is often voluntary (Schwarze et al, 2011;Paudel et al, 2012). In various countries it has been debated whether these arrangements should be reformed to provide policyholders stronger incentives to limit the risk.…”