Assurance des catastrophes naturelles : faut-il choisir entre prévention et solidarité ?
AbstractThis paper investigates the trade-off between solidarity and incentives to prevention in the insurance of natural disasters. Our strating point is the French indemnification system for natural disasters governed by the Law of 13 July 1982: in order to assert the solidarity of the nation with high risk individuals, all property insureds have to pay a socalled cat-nat premium. The amount of this premium is set by the Government and it does not depend on incurred risk, which strongly reduces the efficiency of prevention incentives. We establish a condition under which the liberalization of the market for natural disaster insurance associated with compensatory transfers would lead to a Pareto improvement, although individual prevention costs are unobservable. We characterize the trade-off between prevention and solidarity which follows from such a policy and we show that it dominates incentives through deductibles. Finally we also show that our results still hold in a setting where there is an asymmetry of information about individual risks between insureds on one side and insurers and the Government on the other side.
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Bibliographic InfoArticle provided by ENSAE in its journal Annals of Economics and Statistics.
Volume (Year): (2005)
Issue (Month): 78 ()
Other versions of this item:
- L. Latruffe & P. Picard, 2002. "Assurance des catastrophes naturelles : faut-il choisir entre prévention et solidarité ?," THEMA Working Papers 2002-31, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
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- Grislain-Letrémy, Céline, 2009. "Assurance des risques naturels en France : sous quelles conditions les assureurs peuvent-ils inciter à la prévention des catastrophes naturelles ?," Economics Papers from University Paris Dauphine 123456789/5518, Paris Dauphine University.
- Pierre Picard, 2005.
"Natural disaster insurance and the equity-efficiency trade-off,"
- Pierre Picard, 2008. "Natural Disaster Insurance and the Equity-Efficiency Trade-Off," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 75(1), pages 17-38.
- Véronique Le Bihan & Sophie Pardo, 2010. "Les limites de la couverture des risques en aquaculture : le cas des conchyliculteurs en France," Working Papers hal-00527115, HAL.
- Céline Grislain-Letrémy & Sabine Lemoyne de Forges, 2011. "Coordinating Flood Insurance and Collective Prevention Policies: A Fiscal Federalism Perspective," Working Papers 2011-07, Centre de Recherche en Economie et Statistique.
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