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The unfortunate regressivity of public natural hazard insurance: A quantitative analysis of a New Zealand case

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  • Owen, Sally
  • Noy, Ilan

Abstract

Natural hazard insurance is almost always provided through public-private partnerships. Given the dominant role of the public sector, it is surprising that equity issues have not faced more scrutiny with respect to the design of hazard insurance. We provide a detailed quantification of the degree of regressivity of the New Zealand earthquake insurance program – a system that was designed with an egalitarian purpose. We measure this regressivity as it manifested in the half a million insurance claims that resulted from the Canterbury earthquakes of 2011. As in other cases, this can be remedied with modifications to the program’s structure.

Suggested Citation

  • Owen, Sally & Noy, Ilan, 2017. "The unfortunate regressivity of public natural hazard insurance: A quantitative analysis of a New Zealand case," Working Paper Series 20247, Victoria University of Wellington, School of Economics and Finance.
    • Handle: RePEc:vuw:vuwecf:20247
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    Cited by:

    1. Nguyen, Cuong & Noy, Ilan, 2017. "Insuring earthquakes: How would the Californian and Japanese insurance programs have fared down under (after the 2011 New Zealand earthquake)?," Working Paper Series 6416, Victoria University of Wellington, School of Economics and Finance.
    2. Aditya Kusuma & Bethanna Jackson & Ilan Noy, 2018. "A viable and cost-effective weather index insurance for rice in Indonesia," The Geneva Risk and Insurance Review, Palgrave Macmillan;International Association for the Study of Insurance Economics (The Geneva Association), vol. 43(2), pages 186-218, September.
    3. Sally Owen & Ilan Noy, 2019. "Regressivity in Public Natural Hazard Insurance: a Quantitative Analysis of the New Zealand Case," Economics of Disasters and Climate Change, Springer, vol. 3(3), pages 235-255, October.
    4. Qin, Ping. & Chen, Peilin. & Zhang, Xiao-Bing. & Xie, Lunyu., 2020. "Coal taxation reform in China and its distributional effects on residential consumers," Energy Policy, Elsevier, vol. 139(C).
    5. Porntida Poontirakul & Charlotte Brown & Erica Seville & John Vargo & Ilan Noy, 2017. "Insurance as a Double-Edged Sword: Quantitative Evidence from the 2011 Christchurch Earthquake," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 42(4), pages 609-632, October.

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    More about this item

    Keywords

    Natural hazard insurance; Canterbury earthquakes 2011; New Zealand; Hazard insurance;
    All these keywords.

    JEL classification:

    • D30 - Microeconomics - - Distribution - - - General

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