Flood Insurance Coverage in the Coastal Zone

Landry, Craig E.; Jahan‐Parvar, Mohammad R.

doi:10.1111/j.1539-6975.2010.01380.x

Cited by 103 publications

(52 citation statements)

References 40 publications

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“…For example, researchers have examined the problems and the potential of NFIP (Anderson, 1974), the proposed changes for the NFIP (United States General Accounting Office (GAO), 1983), and the demand for flood insurance (Browne & Hoyt, 2000). Others have looked at the participation in NFIP by coastal communities (Landry & Jahan-Parvar, 2011;Petrolia, Landry, & Coble, 2013) and flood risk perception in lands protected by 100-year levees (Ludy & Kondolf, 2012). Similarly, researchers have studied different aspects of CRS.…”

Section: Literature Reviewmentioning

confidence: 99%

Flood disaster management policy: an analysis of the United States Community Ratings System

Sadiq¹,

Noonan

2015

Journal of Natural Resources Policy Research

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Abstract:In 1990 the US Federal Emergency Management Agency created the Community Ratings System (CRS) to engage local governments to enhance community flood resilience. CRS encourages community flood risk management activities by discounting flood insurance premiums commensurate with the level of flood management measures implemented. Using a national sample of communities, this study empirically identifies factors motivating both communities' decision to participate and intensity of participation in CRS. The results indicate that local capacity, flood risk factors, socio-economic characteristics, and political economy factors are significant predictors of CRS participation. Further, factors predicting participation in CRS differ from factors predicting CRS scores.keywords: disaster management; community resilience; flood insurance; flood risk * Corresponding author.

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Section: Literature Reviewmentioning

confidence: 99%

Flood disaster management policy: an analysis of the United States Community Ratings System

Sadiq¹,

Noonan

2015

Journal of Natural Resources Policy Research

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“…NFIP premiums are set based on flood zone and a limited set of house attributes (Kousky 2011b), and state pool wind policy premiums are typically set at the state level with differences based only on mitigation activities undertaken (Petrolia et al 2015). In the revealed preference data, therefore, it is difficult to decouple the effects of premium and risk level (Kousky 2011b;Petrolia et al 2015, Landry andJahan-Parvar 2011). Premiums and deductibles are also linked and so the trade-off between them is determined in the rate setting.…”

Section: Literaturementioning

confidence: 99%

“…To date, a clear statement on the subject remains elusive. Most importantly, estimated premium elasticities from all studies relying on revealed preference data are influenced by the correlations between premium and risk, deductible, and coverage limit, and by the effects of regulations such as the mandatory purchase requirement and subsidies (Kousky 2011b;Landry and Jahan-Parvar 2011). Keeping that in mind, empirical studies that have reported premium elasticities for flood or general homeowners' insurance have presented values ranging from -0.1 (inelastic) to about -2.0 (elastic), a range that could lead to different policy decisions ( Table 1).…”

Section: Premium and Deductiblementioning

confidence: 99%

Homeowner purchase of insurance for hurricane-induced wind and flood damage

et al. 2017

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Understanding the circumstances under which homeowners will purchase insurance is critical to creating an effective insurance market for hurricane wind and flood loss. This paper contributes to the empirical literature on the subject through an analysis of survey data for homeowners in North Carolina. We develop separate mixed logit models for flood insurance and wind insurance purchasing decisions. The analysis uses stated preference data on the influence of premium and deductible to address some limitations of revealed preference data in which it is difficult to fully decouple effects of premium, deductible, risk, and coverage limit, and mandatory purchase requirements. The results for flood insurance and wind insurance are similar. We find evidence that the following are all significant and associated with higher probability of purchasing insurance-lower premium, lower deductible, more recent previous hurricane experience, location in a floodplain or closer to the coast, higher income, and younger homeowners. However, demand is relatively inelastic with respect to premium and deductible, and the willingness to pay for a $1 reduction in deductible varies throughout the population with some willing to pay more than $1, a behavioral anomaly. The recency of the last hurricane experience is more influential for homeowners who experienced damage than for homeowners who did not. Results suggest that insurance purchase and home retrofits are complements, not substitutes. Finally, the paper presents statistical models that can be used to predict insurance penetration rates for a region under different premium levels.

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“…53 The numbers are believed to have been even lower for business; approximately 26,400 businesses with fewer than 50 employees were in the Sandy inundation zone in New York, but only 1,400 commercial NFIP policies were in effect when Sandy hit-95 per cent of them had no flood insurance. 54 Landry and Jahan-Parvar (2011). 55 Browne and Hoyt (2000).…”

mentioning

confidence: 99%

“…56 Landry and Jahan-Parvar (2011). 57 Browne and Hoyt (2000); Kriesel and Landry (2004);Michel-Kerjan and Kousky (2010); Kousky (2011);Landry and Jahan-Parvar (2011). 58 Botzen and van den Bergh (2012).…”

mentioning

confidence: 99%

Could Flood Insurance be Privatised in the United States? A Primer

Michel-Kerjan¹,

Czajkowski²,

Kunreuther³

2014

Geneva Pap Risk Insur Issues Pract

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Since 1968, homeowners' flood insurance in the United States has been mainly provided through the federally-run National Flood Insurance Program (NFIP). The Flood Insurance Reform Act of 2012 raises the possibility of moving coverage to the private sector, assuming the market can price this risk effectively and that premiums reflect risk. This paper provides the first large-scale quantification of risk-based premiums for over 300,000 residences prone to either storm surge or inland flooding using commercially developed probabilistic catastrophe models, and compares these premiums with those currently charged by the NFIP. Our findings reveal significant differences between the two. In some areas, the NFIP charges prices that are more than 15 times the pure premium, while other areas are charged up to three times less than the pure premium. The paper discusses the market and policy implications of these findings. Since 1968, homeowners' flood insurance in the United States has been mainly provided through the federally-run National Flood Insurance Program (NFIP). The Flood Insurance Reform Act of 2012 raises the possibility of moving coverage to the private sector, assuming the market can price this risk effectively and that premiums reflect risk. This paper provides the first large-scale quantification of risk-based premiums for over 300,000 residences prone to either storm surge or inland flooding using commercially developed probabilistic catastrophe models, and compares these premiums with those currently charged by the NFIP. Our findings reveal significant differences between the two. In some areas, the NFIP charges prices that are more than 15 times the pure premium, while other areas are charged up to three times less than the pure premium. The paper discusses the market and policy implications of these findings.

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Flood Insurance Coverage in the Coastal Zone

Cited by 103 publications

References 40 publications

Flood disaster management policy: an analysis of the United States Community Ratings System

Flood disaster management policy: an analysis of the United States Community Ratings System

Homeowner purchase of insurance for hurricane-induced wind and flood damage

Could Flood Insurance be Privatised in the United States? A Primer

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